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Here’s why the Argo Blockchain share price has rocketed over 20% today!

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Hardware at Argo Blockchain's mining facility at Baie Comeau, Canada
Image: Argo Blockchain

The Argo Blockchain (LSE: ARB) share price has soared over 20% higher today, despite the company not releasing any news. What gives? And should I finally be placing my worries over volatility to one side and buying a stake?

Why is the Argo Blockchain share price flying?

ARB is bouncing today in tandem with Bitcoin. The highly volatile cryptocurrency is up almost 12% as I type and closing in on the £28,000 level per coin. It’s not been this high for over a month. Something’s clearly afoot.

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That ‘something’ seems to be news that online retail giant Amazon (NASDAQ: AMZN) is investigating ways in which it can accept payments in Bitcoin. It’s now advertising for someone with sufficient experience in the cryptocurrency space to take the lead in developing such a system on its platform. 

According to an insider quoted by City AM, it might not be the only cryptocurrency accepted by the near-$2trn dollar behemoth either. Ethereum, Cardano and Bitcoin Cash have also been mentioned. In fact, the same person also claims that Amazon could then launch its own token in time.

Whether this is all true or not is another thing entirely. However, it has succeeded in bringing the Bitcoin bulls back to the market. This news also comes shortly after Tesla boss Elon Musk’s dramatic handbrake turn on the cryptocurrency. Speaking at a recent conference, Musk said that his car company could revert to accepting Bitcoin again if it satisfied certain environmental criteria. 

Back on track?

Having been on a negative trajectory since mid-February, investors must be hoping that today marks a turning point for the Argo Blockchain share price. I must say that even a cryptocurrency sceptic like me (my views on blockchain technology, in general, are another thing entirely) thinks this news is very exciting. The potential involvement of a company like Amazon is another shot in the arm for Bitcoin and, by association, Argo.

Whether it leads to the sustained rise that holders hope for is open to question. As the last few months have shown, the Argo Blockchain share price is seriously correlated to Bitcoin. Sure, one might argue that a similar thing could be said for a traditional miner. When the gold price falls, for example, so do the stocks of companies digging it up.

True as this may be, the gold price hasn’t fallen by 40% since April. Moreover, ARB still has a long way to go to get back to where it was. 

If I were a holder, I’d also need to be wary of the possible regulation of cryptocurrencies and ongoing concerns over security. None of this involves ARB directly. But that’s the problem. The firm can hit all of its strategic goals and yet still falter through no fault of its own. 

Still risky

The rise and rise of the Argo Blockchain share price from late 2020 was evidence that it’s possible to dramatically increase my wealth in short order if I pick the right stocks. Naturally, that last bit is the most challenging aspect.   

Despite today’s encouraging news, ARB’s track record to date would suggest that it’s still a stock that only the most risk-tolerant investors are likely to feel comfortable owning.

Sustained rise or otherwise, I’d still only buy ARB with money I could afford to lose. 

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The content in this article is provided for information purposes only.  It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon and Tesla. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.

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