BTC Top or Pause at 100K Milestone?

As the cryptocurrency market pulls back, investors are looking for the next spring higher, with certain companies offering intriguing alternatives through their stock offerings.

A BTC Pause or a Top?

Last week, Bitcoin popped above the $100,000 mark, officially reaching six figures. However, BTC encountered a notable pullback a day later. The cryptocurrency fluctuated above and below the six-digit line until yesterday when it fell due to concerns about an impending correction. Now that Bitcoin has accomplished the target that many traders and analysts were aiming for in the wake of the Trump election, which saw a surge in demand for cryptocurrencies, the future for BTC seems more uncertain.

Historically, November has been the best month for Bitcoin, followed by December, which is part of its usual winter surge. However, the recent events driving its upward movement have been somewhat unique. The initial pullback on Friday was attributed to profit-taking, as would be expected after such a strong move throughout November. At that time, relatively new holders were seen selling. But since then, it appears that longer-term holders have also started to offload their holdings, which has caused some investors to worry that the market may have reached a top.​

A Buffer Against Volatility

Bitcoin holds a history full of sharp price fluctuations. Some companies largely involved in cryptocurrency business offer some buffer against volatility, as they generate revenue from other sources that can offset Bitcoin's sharp fluctuations. One such company focusing primarily on blockchain technology and Bitcoin is Riot Platforms. It is the third-largest corporate holder of Bitcoin, having mined all its holdings itself. Unlike other holders, such as MicroStrategy, which issues shares to purchase more crypto, Riot Platforms' holdings and accumulation do not depend on BTC's market value. When the price rises, the company can simply continue expanding its portfolio without paying a premium. Riot Platforms produces over 1,000 BTC per month and has squirrelled away 10,400 BTC in its vaults.

Despite Bitcoin recently reaching an all-time high, the overall sentiment of traders, as measured by derivatives markets, has remained relatively stable. This could indicate that the election of former President Trump and his appointment of a pro-crypto SEC chair have brought forward the typical year-end rally for cryptocurrency. Sideways trading may not necessarily signal a market top or pullback but rather a pause as the broader market catches up.​

RIOT Range Points to Breakout

The price action of RIOT may have formed a falling wedge pattern, suggesting a potential price reversal and an upward continuation towards the $19 and $21 levels, followed by a potential breakout to higher levels. In the near term, as the stock appears to be consolidating within a range of $11 to $14, a breakout seems imminent. A move above the range top could pave the way for an ascent to $16, while a decline below the range bottom could potentially lead to a drop towards the supports at $8 and $6.5.

Source: SpreadEx / RIOT PLATFORMS

Bitcoin recently accomplished the $100,000 milestone, but concerns about an impending correction led to a pullback. Still, companies like Riot Platforms, which mines and holds Bitcoin, offer a buffer against volatility as they generate revenue from other sources. Despite Bitcoin's all-time high, the rally may be just a pause rather than a market top.​