morgan9471

RIOT diverges from BTC and should reverse

Short
NASDAQ:RIOT   RIOT BLOCKCHAIN INC
6639 views
66
This is my first idea I'm publishing to TradingView, so I'm eager to hear your thoughts/criticism.

The premise starts by stating that RIOT is highly correlated to BTC /USD, given how the business model is BTC mining that seems fair. As such, with the recent increase in BTC /USC RIOT has gained also, but sometime on Feb 9th it started diverging from BTC /USD and has only increased the divide since then. Why? There hasn't been a single catalyst coming from inside the company and it doesn't hold any BTC and is a money losing operation while trading at 1288 times last quarter's earnings . So my guess is that there's no reason to sustain this diverges and thus we'll go down from here.

I'm not going to say it's going bankrupt, but it should revert back to being tightly correlated with BTC /USD.

My prediction/guess - it reverts back to $33/share level.
Comment: I've dug deeper into RIOT since I saw some comments about their historical price. The company goes back to the year 2000, which seemed odd for a blockchain company. After reading their 2016 10-K report I learned that up to later 2017 it was a failing biotech company called Bioptix (also having gone by the names Venaxis and Aspen Biopharma). They were going out of business but then in 2017 the CEO rebranded it to RIOT and started mining bitcoin.

There was even an SEC investigation (dropped in February 2020) into the company. The investigation was due to possible securities fraud given how they pumped their stock by adding "blockchain" to their name.

This is a fascinating short the more I look into it...
Comment: It seems like the consensus (at least looking at the early comments) is that RIOT is in fact due for a correction, however I do want to make sure it's not just an echo chamber forming. I would really appreciate to hear a bull case for RIOT going forward. Thanks!

Comments

Congrats on your first idea! We've featured this in Editors' Picks. We look forward to reading what others say.
200 coins
+10 Reply
morgan9471 TradingView
@TradingView, Thanks :) loving the product and PREMIUM!
+5 Reply
I agree. The question is how large of a correction this will be. I tried historical analysis and we are looking anywhere from -10% to -25%. It is going to happen in a matter of hours from the time of me making this comment.
+5 Reply
danfazeo danfazeo
@danfazeo, Well, after digging deeper into the historical analysis, it seems I've gotten the timing quite wrong. There will still be a correction of up to -40% but which will begin in 2-3 weeks. Currently, we are looking at a huge bull run of +50% and THEN there will be the aforementioned massive correction/mini bear market that will last two or three months at the end going to -40%. A small -5% to -10% very short-term correction still possible in the coming days though.
+1 Reply
morgan9471 danfazeo
@danfazeo, would you be able to share your analysis/charts? I'd love to see this perspective. Because I'm currently modeling this as like a GME/SNDL pump and dump scenario, not a secular bull run based on organic excitement around the company.
Reply
SeanAbbott danfazeo
@danfazeo, It will be down to $42 Range atleast.
+1 Reply
coiotul43 SeanAbbott
@SeanAbbott, when ..short term or..is t=it going to 54k and then down to 42 ?
Reply
I agree, definitely ripe for a short and definitely heavily correlated with BTC. I have noticed FTFT and MARA are also extremely correlated. FTFT has stayed in-line with BTC but MARA has gotten farther out past its skis than even RIOT in my opinion.

Great charting and explanation.
+4 Reply
I disagree. BTC and RIOT cannot be compared in a traditional sense.

If BTC goes from 48-55k that's a significant % difference of course... but in reality it is adding $7000 per BTC to RIOT's treasury... every move for BTC from this point on is significant for all BTC focused treasuries and miners.
+3 Reply
I actually shorted this today. My thoughts are similar. I actually BTC is in a bubble and is headed towards popping in the next month. When it pops, blockchain stocks are going to drop hard.
+2 Reply
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