RIOT Blockchain Inc Stock Price: Hits resistance, fails at first try as moving averages cross over

• RIOT shares drop 3% on Wednesday at $49.82.
• Bitcoin also lower which is weighing on the crypto mining stock.
• RIOT shows a bearish moving average cross over.

Update: RIOT shares are nearly 3% lower on Wednesday as resistance proves futile! The 9 day moving average has crossed below the 21 day, often taken as a bearish signal. Bitcoin is also struggling for momentum and is down on Wednesday.

RIOT shares staged a nice recovery on Tuesday as retail traders jumped back in to take advantage of some recent weakness. Shares in RIOT had dropped briefly below $40 last Thursday but have since recovered. RIOT closed Tuesday up 7.5% at $51.51.

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RIOT Blockchain as the name suggests is involved in the blockchain system and is primarily a Bitcoin miner. RIOT also has an interest in Coinsquare Ltd in Canada, a digital currency exchange. 

RIOT stock chart

So we have established that RIOT is a play on Bitcoin. So why not just invest directly in Bitcoin then and avoid extra risk in factoring in a company on which you have to do further analysis?

Good question. RIOT is in effect a startup cryptocurrency company having had a previous existence as Bioptix. Nothing wrong with changing the name and moving into the hot space, but as an investor that means extra due diligence is required. The success of RIOT and other crypto miners is down to how well they manage their business and mining operations. RIOT has been closely correlated to Bitcoin as we can see below but has appreciated far more sharply and now appears to be a more volatile play on Bitcoin.

So if you are to get involved, just make sure to know this is a highly speculative play and requires careful risk management to preserve capital. Alternatively, make sure it is capital you can afford to lose. That is not to say money cannot be made from swing and trend trading.

If you are looking for solid fundamentals and an income stream, with resultant steady EPS and P/E, then RIOT is not a stock for you. This is a highly speculative play. Revenues have grown but from virtually zero in 2016: from $100k to $6.8 million in 2020. RIOT has a market cap of $3.4 billion. Despite these lofty valuations, RIOT shares have skyrocketed, leaving the underlying Bitcoin in the dust. RIOT is up about 6,000% in a year and nearly 2,000% over the last six months.

The shares have recently come under some pressure, understandable given the meteoric ascent. Currently, support sits at $43.76 provided by the 50-day moving average. We have seen how well this worked recently for GameStop. Below this, the next support is at $39 and a break there leads to near $28 and a new range of $17 to $28. The first target to breach as resistance is the 9 and 21-day moving averages at $52.05 and $52.89, respectively. 

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