Bitcoin mining stock analyst discusses ‘Trump Bump’

HC Wainwright analysts believe that the market’s positive response to cryptocurrencies indicates growing confidence in Republican presidential candidate Donald Trump’s election prospects.

This trust stems from the fact that Trump is known for his pro-crypto stance, particularly his support for Bitcoin (BTC) mining in the US.

Bitcoin and BTC mining stocks saw a significant surge following a failed assassination attempt on Trump during a campaign rally in Butler, Pennsylvania on Saturday, July 13. BTC has risen over 9% since the incident, reaching a peak of around $63,790 on Monday, while mining stocks gained around 10% during Monday’s session.

“Many believe this tragic incident immediately boosted Trump’s chances of winning the November election. Given Trump’s perceived pro-crypto candidate and his open support for Bitcoin mining in the U.S., markets rallied following the failed attempt,” wrote Mike Colonnese, CFA.

Sales pressure

This price increase coincides with the end of the selling pressure from the German government, which liquidated its remaining 50,000 BTC seized from the Movie2k case. The overhang in BTC prices was mitigated by US spot BTC ETFs seeing net inflows of over $1 billion last week, acquiring over 18,000 BTC.

Additionally, the high on-chain selling pressure was partly due to the long-awaited start of Mt. Gox refunds. In 2010, Mt. Gox became the world’s largest Bitcoin exchange but faced a significant setback in 2014 when it ceased trading, filed for bankruptcy, and announced the loss of approximately 850,000 BTC due to thefts. Recently, the movement of 47,228 BTC from a cold wallet associated with Mt. Gox triggered market reactions, while miners’ selling pressure continues to affect prices following the recent halving that reduced mining rewards by 50%.

Increased hash rate

In the week ending July 7, BTC outperformed broader equity indices, rising 8.7% to $61,015. Network hashrate increased 2.7% to 598 EH/s, while network difficulty remained at 79.5T following a 5% adjustment on July 4.

Source: HC Wainwright company files.

Higher BTC prices offset lower transaction fees, with hash rates rising 5.2% to $0.049 per TH per day, re-attaining the $0.05 per TH per day level for the first time in three weeks.