The Argo Blockchain PLC (LON: ARB) share price has risen 118.6% since the year started leaving many wondering whether we are at the beginning of a new bull market. The short answer is that rising Bitcoin prices have fueled the recent rally in Argo shares.
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Bitcoin prices have risen 21.88% in the past week and are up 28.61% for the year after a recent surge in crypto prices. To determine whether the recent rally is sustainable, we must look at the fundamental drivers behind the rally.
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First, most analysts admit that the recent rally in Bitcoin prices that has seen the leading crypto trade above $21,000 for the first time in two months is primarily driven by expectations that the Fed will start slowing down its rate hikes this year.
To put things into perspective, the Federal Reserve hiked interest rates a record seven times last year to bring its benchmark rate to a range of 4.25%-4.50%, a high last seen in 2007 before the 2008 financial crash and ensuing recession. Very few people had seen this coming.
However, recent data indicates that US inflation is slowing down, and the labour market is not weakening, which leaves the Fed with little choice but to change its policies. However, the Fed has resisted change due to rampant market speculation.
Every time investors think the Fed is about to change its monetary policies, we see a market surge that goes against the Fed’s ultimate goal of inflicting maximum pain on market participants. However, the Fed should realise that the markets will rally on any hints of a policy change.
Looking at Argo Blockchain, the Bitcoin miner recently made some drastic changes that saw it sell its flagship Helios facility in Texas, although it retained ownership of its mining rigs. The measures taken by the firm should keep it afloat until Bitcoin prices recover.
Therefore, it is safe to say that Argo Blockchain shares will keep rising as long as Bitcoin prices rise. Some analysts expect Bitcoin prices to keep rising until the year ends, but only time will tell whether this forecast is accurate.
*This is not investment advice.
The Argo Blockchain share price.
The Argo Blockchain share price has risen 118.57% this year. Will the rally continue?
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