ALERT: Should You Buy These Crypto Stocks on the Dip?

Canadians should keep an eye on reeling crypto stocks like Hut 8 Mining Ltd. (TSX:HUT)(NASDAQ:HUT) and others in late July.

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Diagonal chain made of zeros and ones. Cryptocurrency and mining.

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The cryptocurrency space has been in the throes of a brutal correction since the beginning of the spring season. That slump has worsened in the first weeks of the summer. Today, I want to look at two top crypto stocks that have been throttled in this bear market. Should investors bet on a rebound? Let’s dive in.

How have digital currencies performed in July?

Bitcoin was priced at $22,567 per unit as of mid-morning trading on July 21. It has bounced back from the 52-week low of approximately $17,000 per unit that it fell to earlier this month. Other top crypto assets have also been hit by turbulence. Ethereum, the second-largest cryptocurrency by market cap, was trading just above the $1,500 mark at the time of this writing. It sank to a triple-digit price point in early July.

Digital currencies have suffered in the face of broader volatility and a tightening interest rate environment. The crypto space is unlikely to find respite in this area, as central banks across the developed world commit to tighter monetary policy to combat soaring inflation. Investors may want to consider crypto miners as an alternative in this choppy market.

This crypto stock is one of the top miners on the TSX

Hut 8 Mining (TSX:HUT)(NASDAQ:HUT) is the first crypto stock I’d zero in on in late July. This Toronto-based company operates as a cryptocurrency miner. Its shares have plunged 73% in 2022 at the time of this writing.

Investors can expect to see this company’s next batch of results in the first half of August. In Q1 2022, Hut 8 Mining delivered quarterly revenue growth of 67% to $53.3 million. Hut 8 was bolstered by strong activity in its mining operations as the crypto market was still in good shape to open the fiscal year. Meanwhile, its self-mining operations posted $49.3 million in revenue while mining a total of 942 Bitcoin. Moreover, it posted net earnings per diluted share of $0.31 — up from $0.15 in the previous year. Better yet, adjusted EBITDA was reported at $27.1 million compared to $16.1 million in the first quarter of fiscal 2021.

Shares of this crypto stock have bounced back nicely after slipping into technically oversold territory in early July.

Here’s another top crypto stock that has grown its digital mining footprint in recent years

HIVE Blockchain Technologies (TSXV:HIVE)(NASDAQ:HVBT) is a Vancouver-based cryptocurrency mining company with locations in Sweden and Iceland. This crypto stock has plunged 68% so far this year. That has pushed the stock into negative territory in the year-over-year period.

The company unveiled a snapshot of its fourth-quarter results on July 20. It posted a fourth-quarter loss of $26.7 million — down from a profit in the previous year. HIVE Blockchain reported total revenues of $211 million.

This crypto stock currently possesses a very attractive P/E ratio of 0.4. HIVE Blockchain is in much better value territory compared to its top competitors. Moreover, it boasts a very strong balance sheet, which should help it traverse this difficult environment.

Bottom line

The broader crypto market has enjoyed a small uptick in the second half of July, but I’m not eager to get in on this space right now. There are too many headwinds for crypto, as policymakers wage war on inflation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends Bitcoin and Ethereum.

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