The Argo Blockchain (LSE: ARB) share price remains significantly off the record closing peaks of 284p hit in mid-February. It’s been on a rollercoaster ride this week too, due to fresh volatility on cryptocurrency markets.
Bitcoin prices plunged back below $50,000 on Thursday (more on this later) and even fell to around $47,650 at one point. This is some way off the record peaks north of $63,500 struck just three months ago. However, cryptocurrency prices have recovered ground since then, pulling the Argo Blockchain share price with it. What can we expect this UK tech share to do next?
Argo Blockchain shares on the rebound?
There are several reasons why the Argo Blockchain share price could soar again:
#1: Banker interest in Bitcoin keeps growing. Some of Wall Street’s biggest banks continue to ramp up their interest in the digital currency sphere. Goldman Sachs carried out its first digital currency trades last week, and a number of other banks are preparing to dip their toes into the water too. This bodes well for Bitcoin prices and, by extension, profits at Argo Blockchain. Growing bank interest over the past 12 months has improved the credibility of crypto assets for many investors, boosting crypto values in the process.
#2: Concerns over energy usage grow. Fears over how much energy is required to mine cryptocurrencies continue to balloon. However, concerns over the environmental impact of the likes of Bitcoin could counter-intuititively boost the Argo Blockchain share price. This is because the company has put the use of renewable energy sources high on its list of priorities. It’s a strategy that could stand it in good stead as the importance of responsible investing grows. Incidentally, the business signed up to the Crypto Climate Accord this week. This directive is intended “to promote the decarbonisation of the cryptocurrency industry.”
Tesla says no!
It’s quite possible that the Argo Blockchain share price could continue climbing in the short term. But I’m afraid my discomfort over cryptocurrencies as an enduring asset class continues to dampen my appetite for this UK tech share.
As I said earlier, Bitcoin prices crashed again this week. It plummeted because Tesla head Elon Musk announced he was reversing his decision to allow customers to buy his company’s vehicles using Bitcoin on environmental grounds. Similar reversals from other blue-chip firms that have rushed into accepting cryptoassets over the past year could lead to additional crypto price plunges.
Besides this, the acceptance of cryptocurrencies as a legitimate asset class by lawmakers remains elusive. This week, Bank of England governor Andrew Bailey warned again that digital currencies have “no intrinsic value.” Meanwhile, the Securities and Exchange Commission in the US punted the launch of a Bitcoin-backed exchange-traded fund (ETF) further down the road.
Cryptocurrencies could well prove to be the hottest asset class of the 21st century. But I’m not prepared to take a risk with my money at the moment. I’m happy to ignore recent dips in the Argo Blockchain share price and buy other UK shares.