If you enjoy trading cryptocurrency tokens like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), then you should seriously consider Riot Blockchain (NASDAQ:RIOT) as an investment. Some folks actually like to view RIOT stock as a good replacement for Bitcoin and Ethereum.
Don’t get the wrong idea here. There’s nothing wrong with owning both the crypto coins and RIOT stock. Yet, not everyone wants to bother with cryptocurrency trading accounts and crypto-wallets.
That’s perfectly understandable, especially if you’re investing within a retirement account or another type of account in which tradable asset classes are limited.
You can buy and sell RIOT shares in many different types of investment accounts. But, should you? That’s a whole other can of worms, so let’s put the magnifying glass to RIOT stock and see what we come up with.
A Closer Look at RIOT Stock
Suffice it to say that the short-sellers have suffered staggering losses lately when it comes to RIOT stock. This stock appears to have magnified the gains in Bitcoin and Ethereum, which themselves have posted impressive returns recently.
It wasn’t always sunshine and rainbows for RIOT stockholders, however. This stock has a 52-week low of just 51 cents. That low was printed in March of 2020, during the Covid-19 pandemic crisis which put negative pressure on many asset classes.
The journey to recovery was gradual but steady for RIOT stockholders. By mid-November, the share price had already captured the $4 level. Yet, that was just the beginning of the story.
Next up was a bull run of epic proportions. As the Bitcoin and Ethereum prices started to gain traction, so did the RIOT stock price. By the end of 2020, the stock had already broken above $16.
Then the RIOT stock bulls went into overdrive, sending the the share price above $50 and $60. The next targets for 2021 should be the psychologically significant $100 level followed by $120.
Providing Leverage to Crypto
It’s hard not to notice the leveraged/magnified correlation between Bitcoin and RIOT stock.
I’ll give you an example of what I’m talking about. Soon after the stock market closed on Feb. 19, the Bitcoin price was slightly above $55,500 for a 6.5% daily gain. Meanwhile, RIOT stock had posted a 15% return that day.
I’m not saying that RIOT stock will consistently double Bitcoin’s daily gains. It’s just that RIOT shares have the potential to extend the returns of popular cryptocurrency tokens like Bitcoin and Ethereum.
Just be aware that RIOT stock is quite volatile. It’s prone to brutal red days just as much as exhilarating green days. Hence, this stock is not appropriate for large portfolio positions.
That being said, it’s probably not a coincidence that InvestorPlace contributor Faisal Humayun placed RIOT stock at the top of his list of seven stocks to ride the crypto wave.
A Top Bitcoin Miner and More
What Riot Blockchain excels at, more than anything else, is mining Bitcoins.
And by that, I mean a whole lot of Bitcoins. Known for efficient mining operations, Riot Blockchain produced 730 newly minted Bitcoins during 2020’s first nine months.
Believe it or not, Riot Blockchain plans to have 22,640 miners deployed by June of this year. That includes 15,600 model S19 Pro miners recently purchased from Bitmain.
Moreover, Riot Blockchain isn’t just a Bitcoin miner. It’s also a blockchain-focused holding company.
Currently, Riot Blockchain’s portfolio includes cryptocurrency accounting and audit technology services provider Verady and blockchain-based escrow service Tesspay.
The Bottom Line
As the more popular cryptocurrency tokens increase in value, RIOT stock will probably magnify the returns substantially.
Besides, with robust mining operations and value-added blockchain-focused holdings, Riot Blockchain is a compelling and convenient entry point into the great big world of crypto.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.