Why Canaan Stock Jumped 17% This Morning | The Motley Fool


What happened

Shares of Canaan (NASDAQ:CAN) jumped as much as 17.2% higher on Monday morning. The Beijing-based developer and maker of cryptocurrency mining machines didn’t have any company-specific news to share today or over the weekend, but the stock benefitted from a positive development in the crypto space.

So what

Payment-processing giant Visa (NYSE:V) just announced that it will start to settle payments over the Ethereum (CRYPTO:ETH) network later this year. In particular, Visa’s bridge between the cryptocurrency and fiat currency worlds will rely on the Ethereum-based USD Coin (CRYPTO:USDC), whose value is pegged to the U. S. Dollar through Ethereum’s smart contracts.

Visa’s cautious step into the blockchain market is generally seen as a positive sign for the large-scale viability of cryptocurrencies and related services, driving many cryptocurrencies higher today. Ethereum is up by 4.3% at noon, EDT. Bitcoin (CRYPTO:BTC) has gained 3.2%. The USD Coin remained as stable as ever, staying within 0.1% of yesterday’s dollar value.

Image source: Getty Images.

Now what

Canaan’s popular Avalon miners are tailor-made for Bitcoin mining, not Ethereum. The big idea here is that traditional finance powerhouses like Visa are starting to take the cryptocurrency market seriously as a whole, which should lead to increased demand for Bitcoin miners down the road.

Canaan’s shares have now gained 830% in six months, but the skyrocketing journey has not been smooth. The stock also stands 54% below the all-time highs that were set earlier this month, when Bitcoin prices topped out above $61,000 per token.

Canaan is a volatile ticker and should be treated with caution. There are many ways to invest in the Bitcoin and Ethereum markets with far lower market risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.

Leave a Reply