Benzinga - by Shanthi Rexaline, Benzinga Editor.
Bitcoin‘s (CRYPTO: BTC) recent surge since late January has sparked concerns among crypto investors about a potential correction. In this context, economist Peter Schiff highlighted a potential red flag on Monday: the underperformance of bitcoin mining stocks compared to the strong performance of Bitcoin itself.
What Happened: Schiff pointed out the ongoing weakness of bitcoin mining stocks.
“They are getting killed even as Bitcoin is up big and other Bitcoin-related stocks are hitting record highs,” he said. “If I was long Bitcoin I would be worried about this divergence. It could be a sign of trouble ahead for Bitcoin itself.”
Several major bitcoin mining stocks, including Marathon Digital Holdings, Inc. (NASDAQ:MARA), Riot Platforms, Inc. (NASDAQ:RIOT), HIVE Digital Technologies Ltd. (NASDAQ:HIVE) and Bit Digital, Inc. (NASDAQ:BTBT), CleanSpark, Inc. (NASDAQ:CLSK), all experienced premarket losses on Tuesday, following declines on Monday.
Even Core Scientific, Inc. (NASDAQ:CORZ), which bucked the downtrend on Monday, fell in premarket trading.
Schiff’s comments suggest he interprets the weakness in bitcoin miners as a potential leading indicator of a future correction in the price of Bitcoin.
Why It’s Important: After a sharp decline in January, bitcoin mining stocks saw a resurgence riding the wave of the Bitcoin rally. However, their performance has remained volatile.
In January, Bernstein analysts attributed the subdued investor interest in these stocks to a reluctance to use them as a proxy for Bitcoin, according to CoinDesk. At the time, the analysts recommended using the weakness as a buying opportunity, anticipating a rally in Bitcoin following the approval of a spot Bitcoin ETF.
In premarket trading, the Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI) was down 5.29% at $16.10, while Bitcoin was up 2.25% at $66,691.74.
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