When I saw Bitcoin miner Argo Blockchain’s share price increase today, I was in awe of investors in cryptocurrency and stocks related to it. Here’s why.
Volatile trends for the Argo Blockchain share price
The Argo Blockchain share price is up 17% in today’s trading. That is a serious increase in a day. But for the likes of this Bitcoin miner, share price volatility is quite common.
In the last two weeks, the share has dropped 37%. In February, the share had risen by 198%. As someone with a preference for relatively predictable FTSE 100 or FTSE 250 stocks, this is a lot of stock price movement. I think it takes real nerves.
Even volatility would be acceptable for me, if only I could project what comes next. Unfortunately that is not the case here. The Argo Blockchain share is tied to Bitcoin prices. But we never know where they will go next.
Unlike other currencies, Bitcoin is not widely used. It does not have backing from authorities like all other currencies do. It is gaining legitimacy, but it is not driven by the fundamentals of a country or even its prospects.
Why the share is up today
Argo Blockchain’s share price is partly linked to its own performance though. Its latest update was positive and pushed its share price up. But ever since, there has been little or no news flow on the stock (at least none that I can find) that would explain its share price movements.
Which brings me to why I think the Argo Blockchain share price is up today. It is partly the rising Bitcoin price and part speculative purchases of the stock.
Alternatives to the Argo Blockchain share
If I were to buy the stock at all, the allocation would be a sliver of my total investment. Anything more than that would be playing around with financial security, I reckon.
Instead, I can invest in stocks that, like Argo Blockchain, can grow significantly but are still at a relatively nascent stage. Small pharmaceutical stocks that are developing products that are yet to hit the markets, like Futura Medical, are one example.
We do not know how well its treatments will be received yet, but we can make an educated guess. That is not entirely possible for Bitcoin-related stocks, because the market itself is limited and may not even exist tomorrow.
Even cannabis stocks like Cellular Goods are a better investment to consider, in my view. Even though there are no numbers available on the just-listed company, and even though the UK’s cannabis wellness market is unexplored, we still have something to work with.
The market has seen some development in North America, that can give some indication of the potential for the UK. Further, we know that the regulatory environment for cannabis is improving for now, which is helpful in making projections. I see no signs of that for Bitcoin.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.