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Why has the Argo Blockchain share price soared?

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It’s been a breathtaking few days with the evaluation of Algo Blockchain (LSE: ARB). As of this writing on Thursday morning, Argo Blockchain shares have surged 66% in just five days.

But in the long run, things look dramatic, but not so rosy. Even after the recent surge in stock prices, the stock is still 82% lower than it was a year ago.

unclear driver

So why the recent surge in stock prices?

The answer is not very clear in my opinion. It is true that the value of some cryptocurrencies, including Bitcoin, has increased recently. Bitcoin, for example, has risen 8% in the last five days. As a core part of Argo’s business strategy and asset base, a rise in Bitcoin’s valuation should help boost its stock price. But an 8% rise in Bitcoin’s value hardly explains why Argo’s stock has surged by two-thirds of its value.

In fact, there has been no concrete news from Argo that could help explain the spike in recent days. The last big news from the company was announced over two weeks ago. It was simply the company’s regular monthly update. Mining profits were up slightly from the previous month, but his 6% increase was less notable. This is mainly because it reflects changes in the dollar and pound exchange rates compared to the previous month.

Bargain hunters may have boosted the stock recently, as Argo’s price is well below previous levels and trades in pennies. At least for now, I don’t see any other clear reason to explain the strong upward move.

What’s Next for Argo Blockchain’s Stock Price

If so, it is unclear whether this positive momentum will continue. Argo Blockchain’s recent rally in stock could be reversed.

As an Argo shareholder and long-term investor, simply hoping that changes in investor momentum will push prices higher in the short term isn’t the kind of strategy that will help me sleep better at night.

Instead, what I’d like to hope for is a set of concrete reasons to believe the investment case is getting stronger, which could support a higher stock price.

my move

it may happen. For example, if cryptocurrency prices continue to rise, it could benefit both the current value of Algo’s crypto assets and the economics of future mining operations.

But the company has been navigating choppy waters lately. The company announced earlier this month that it was selling thousands of unused mining machines to raise cash to boost its liquidity. This suggests the risk of further dilution of existing shareholders as the company seeks to strengthen its balance sheet. It also casts doubt on the viability of the company’s business model.

That could be bad for stock prices. I have no intention of buying any more shares at this time. Instead, I’m watching to see if Argo releases news that will help build my confidence in the long-term investment case. If that doesn’t happen in the next few months, I will consider selling my shares.

post Why did Algo Blockchain’s stock price skyrocket? first appeared Motley Fool UK.

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of The content of this article is provided for informational purposes only. It is not intended or constitutes any form of investment advice. Bitcoin and other cryptocurrencies are speculative and volatile assets that carry some risks, including the total loss of your invested funds. Readers are responsible for exercising due caution and obtaining professional advice before making any investment decisions.

C Ruan I have a position on Argo Blockchain. The Motley Fool has no positions in any of the shares mentioned. The views expressed about the companies mentioned in this article are those of the author and may differ from official recommendations on subscription services such as Share Advisor, Hidden Winners and Pro. Here at the Motley Fool, by considering diverse insights, We are better investors.

Motley Fool UK 2022

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