Bitdeer Technologies Stock Might Be So Bad That It’s Actually Good

There’s a concept in baseball that a player is due for a home run or a significantly productive play — and that’s the argument I’m going to make for cryptocurrency miner Bitdeer Technologies (BTDR). While I don’t think this is such a controversial take, it must be disseminated with caution. After all, the Barchart Technical Opinion indicator rates BTDR stock as a 56% Weak Sell, noting concerns of a weakening short-term outlook.

Fundamentally, Bitdeer isn’t exactly generating much confidence either. According to Google Finance, BTDR stock has been under pressure due to the sideways nature of the underlying benchmark crypto price. Further, the website notes that “near-term hash rate competition and energy costs remain primary concerns.”

From a trading perspective, Bitdeer stock is a double-edged sword. Because it has a 60-month beta of 2.50 — thus implying 2.5 times more volatility than the S&P 500 index — BTDR may enjoy wild swings upward. At the same time, it’s liable for catastrophic losses.

So, in an environment where anything can happen, why bet on BTDR stock now? To be sure, this question can be asked at any time because Bitdeer is extremely wild, no matter what the circumstances. However, the crypto miner has already suffered a staggering loss, which seems to suggest that much of the bad news has already been baked into the share price.

Over the trailing month, BTDR stock is down 15.3%. Quantitatively, in the past 10 weeks, Bitdeer managed to print only three positive weekly candlesticks. Under these circumstances, the historical trend has been for BTDR to swing higher. By analyzing historical data, the median forecast is a 14.2% move higher over the next four weeks.

If that turns out to be accurate — and bear in mind that’s a huge “if” — I would estimate that the 10/11 bull call spread expiring Sep. 18 looks attractive. But why should you lend credence to this assumption?

Dropping a Truth Bomb About BTDR Stock

What can be said about the future? From a purely empirical and epistemological standpoint, nothing. You can’t even say that the future will occur sequentially because that presupposes the linear concept of time. That is, you are presupposing that time moves forward in an unbroken, sequential chain of “before” and “after.” It could be the case but we don’t know with absolute certainty.

As such, in order to begin any forecast about the future, we have to presuppose a framework to move the argument forward. With Wall Street, the de facto presupposition is that equities move like a random walk. Specifically, when using calculations like Black-Scholes, we are saying that every microscopic slice of time between now and the expiration date of an options contract is an independent, continuous random step.

After the culmination of this random journey, you can calculate the implied probability of an equity triggering profitability. In the case of the aforementioned 10/11 bull spread, the implied probability of profit (hitting the breakeven price of $10.45) is defined as 38.4%. Further, if you reverse engineer Barchart’s Expected Move calculator, the chances of Bitdeer stock hitting $11 at expiration is only 30.89%.

At this point, options traders are free to look at these probabilities and say ‘no thanks’ and that would be completely reasonable. However, since it cannot be absolutely determined that BTDR stock will indeed undergo a random walk, there are alternative theories and models available to consider. One of the general counterarguments is this: what if Bitdeer undergoes a nonrandom walk?

Suddenly, if we presuppose that the next few weeks of price action for Bitdeer stock will be structurally biased, that may change the forward probabilities altogether. Even if you don’t agree with my particular brand of nonrandom modeling, you would only have to look at the quant structure of the ticker itself.

Again, in the last 10 weeks, BTDR stock only printed three up weeks. In my opinion — and I would venture to say most people’s opinions — this is a unique circumstance that should reflexively alter where the crypto miner is likely to end up. With current technology, we can empirically estimate this likely endpoint rather than relying on sheer gut feeling.

Running the Nonrandom Calculations for Bitdeer Stock

Since its public market debut, Bitdeer stock has flashed the 3-7-D sequence (3 up weeks, 7 down weeks, downward slope) 21 times on a rolling basis. At the end of the fourth week following the signal, BTDR has exceeded the equivalent of the $11 strike price a total of 11 times. Admittedly, the sample size is very small but we’re currently looking at a conditioned success rate of 52.4%.

From an expected value (EV) perspective, this nonrandom calculation changes the proposed game entirely. Looking at the spread’s details, traders must pay a net debit of $45 to potentially earn a maximum profit of $55. Theoretically, over the long run, you would be winning the max payout 52.4% of the time or $28.82. You would be losing $21.42, thus leading to a net gain of $7.40.

Now, there’s a massive caveat here and that’s the presupposition itself: there is simply no way of knowing with certainty whether or not BTDR stock will respond to the 3-7-D signal. Just because it has in the past does not necessarily mean the observed pattern will materialize in the future.

However, if we were to assume that randomness is the defining characteristic of Bitdeer stock, the Sep. 18 10/11 bull spread really wouldn’t be tenable. I’m suggesting that if BTDR were to react nonrandomly — as observed through prior manifestations — then there is a more reasonable chance that this trade is financially rational.