Bitcoin Is Weak — RIOT Doesn’t Care

 

If you’ve read my most recent post on Bitcoin, you know I’ve been bearish for quite some time, and that hasn’t changed. Longer-term cycles still suggest lower prices ahead. That said, markets don’t move in straight lines, and based on a shorter-term cycle, there is reason to believe we could see a short-term bounce develop. I have no interest in buying Bitcoin itself, but there is a Bitcoin-related stock that’s starting to get my attention and that stock is RIOT.

Above is a daily chart of RIOT, and in the lower pane I have GBTC for comparison. I like using GBTC as a proxy for Bitcoin because it removes some of the noise and lets me focus on relative performance. Right away, one thing stands out. At point B, GBTC is making new lows relative to point A. Bitcoin, at least through this lens is clearly weaker. RIOT, on the other hand, is telling a very different story.

While GBTC pushed to fresh lows, RIOT held well above its prior low and actually formed a much higher low. That’s classic relative strength. It tells me that despite continued weakness in Bitcoin, buyers are stepping into RIOT earlier and with more conviction. When you see a stock refuse to make new lows while its underlying asset is still sliding, that’s worth paying attention to.

Now, seeing relative strength does not mean I’m rushing out to buy this at the open. Nothing could be further from the truth. Relative strength simply puts a stock on my radar. From there, I let price action do the talking. For me to get involved on the long side, I would need to see clear resistance levels taken out or strong intraday relative strength develop over the coming week. I want confirmation that buyers are willing to press their advantage, not just defend support.

If RIOT fails to do that, I’ll happily do nothing. That’s an outcome I’m perfectly comfortable with. I don’t feel the need to force trades, especially when my broader view on Bitcoin remains bearish. At this point, RIOT is simply a watchlist stock, nothing more.

However, if Bitcoin does manage to rally over the short term, RIOT has positioned itself as a potential leader. That’s the type of stock I want to be focused on, one that shows strength before the move, not after it’s already underway. For now, it’s a waiting game. Let’s see what unfolds in the coming days.

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