RIOT diverges from BTC and should reverse

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!

Trade closed: target reached:

I now believe that this has swung too far in the other direction and it's now time to close this short position. I still don't believe in RIOT the company, but as far as the idea is concerned, which was based on correlation divergence, that has now reverted.

Comment:

After almost a year of watching this correlation, I have to stay that it's a solid idea to bet on their convergence anytime one component diverges too far (over 20%).