Is Canaan Creative (CAN) Stock a Good Investment?

The NASDAQ-listed Canaan Creative stock (CAN) is both hot and cold, judging from the price-performance in the weekly chart. Is CAN stock a good investment, or not, we’ll try to answer in this article.

Back in June, it fell to the lowest possible point because of the actions from the Chinese government and Tesla, an automaker specializing in EV technology. Elon Musk, the Tesla boss, highlighted his worry about the effect of mining crypto coins on the environment, while the Chinese government banned crypto trading in mainland China.

Nevertheless, Canaan Creative stock has weathered all the storms. The company is upbeat on the impressive crypto market everywhere in the world and is keen on selling its Canaan Creative Bitcoin mining equipment to companies instead of individuals.

What is Canaan Creative?

The Canaan Creative website is a Chinese company dealing in electronic hardware; it specializes in integrated circuits, AI, supercomputers, data center-based equipment, and Canaan Creative miner hardware.

In 2013, the company came into the limelight thanks to its CEO, who created the first ASIC miner. The innovation and the frequent surges in the crypto market have led to an enormous demand for its chip. In 2021, the company has shifted its company profile from serving individuals to focusing more on companies that want to take advantage of the burgeoning cryptocurrency space going into the mid-2020s. Therefore, the company has a brighter future as its new clients have a longer time profile than did individuals. A shift in the corporate structure has also helped the company land a sizable contract of up to 100,000 Canaan Creative Bitcoin mining tools, a first since the start of its operations in 2013.

Canaan is forecasting impressive performances in the near and long term. It will make and distribute more mining machines as long as the demand for crypto coins stands. The9 (NASDAQ: NCTY) is one of the big names that has worked with Canaan. In January, it requested 26007 Bitcoin mining machines.

Noteworthy, the investment was possible because of a partnership between Canaan and the former director of The9 (NASDAQ: NCTY). Regardless, such moves increase the profile of the company in the market, a situation poised to continue in the mid and late 2020s.

The Connection with Bitmain

The Canaan Creative vs. Bitmain debate has raged on for a while, but how do the two complement each other? Bitmain has a proposed market value of between $40 billion and $50 billion, making it one of the most valuable companies in the crypto space.

The IPO proposal on the company will increase the profile of Canaan Creative Stock considerably going into the future. Bitmain has consistently managed yearly incomes of about $3 billion, a figure that puts it at an impressive market share for the supply of mining equipment and Bitcoin.

However, all this data remains speculative as it is a private business, but a widely known fact is that RIOT and MARE are significant customers of Bitmain. The two names are big in the crypto world. All these positives will probably help Bitcoin surge–the major catalyst to the growth of Canaan.

A Snapshot of Canaan Creative Stock?

Presently, blockchain and cryptocurrency mining stocks are under immense selling pressure following the losses of early December 2021. The Canaan Creative stock is no exception. From the performance in the weekly chart, CAN sellers are in control, forcing the stock lower, reflecting the state of the market.

As noted, CAN stock prices are within a bullish flag, a pennant. While this formation is technically bullish, the deluge of selling pressure and the huge drawdown of the past few weeks may be an indicator of technical weakness–a development that would further slow down bulls and bog the CAN stock price recovery.

Notably, CAN prices are pulling back from all-time highs posted at around $40. At around $6, the Canaan Creative stock is down around 83 percent, and sellers appear not to be slowing down. Specifically, CAN sellers are stepping up, finding resistance at the middle BB–whose bands are already diverging, pointing to high volatility. The banding along the lower BB suggests strong bear momentum. Even so, the CAN stock price can find support if there is a bounce from $5–marking H2 2021 lows. However, if sellers succeed, the odds of Canaan Creative stock sinking further to 2020 lows, wiping out the impressive gains of 2021 can’t be discounted.

Looking at the bright side, a recovery above $11 might offer a reprieve for currently shredded CAN holders. In that case, the stock could recover, rising to $40 on resumption of H1 2021 stellar gains.

Canaan Price Forecast

CAN chart, the daily time frame

Bitcoin price performance has had a massive effect on the Canaan Creative stock.

The surge in Bitcoin prices often leads to demand for mining equipment, a move that also pumps CAN stock prices. This correlation is evident from the weekly chart performance where the sharp expansion of crypto-asset prices also lifted CAN stock prices. In 2021 Canaan reached an all-time high of around $40, marking crypto peaks of H1 2021 – coinciding with BTC tops of around $64k.

However, the correlation between BTC and CAN went negative in the second half of 2021 when crypto prices tanked before bouncing back in the third quarter. Since then, and as observed earlier, CAN prices have been suppressed, printing lower and on the brink of posting even deeper losses exceeding 85 percent from all-time highs.

On a positive note, the Canaan Creative stock has performed well in 2021. The contracts in place and new deals with corporates will help the company beat its best highs in the future.

Is Canaan Creative (CAN) a Worthwhile Investment?

The legitimization of blockchain technologies has helped rally the crypto market. Giants in the payment segment are coming to terms with the reality of crypto coins. PayPal and Visa are now accepting Bitcoin, Ethereum, Bitcoin Cash, and Litecoin over their networks, a move that will influence over 29 million merchants. Acceptance by the top payment platforms in the world has increased the value of Bitcoin.

Such positive news has shaken off the move by China to clamp down on crypto trading within its land. The ripple effect of the new laws adopted by China saw massive negative dives in the  Canaan Creative and other blockchain stocks.

However, new assurances during the year have increased confidence that the company will continue to perform better as the world continues to embrace cryptocurrency.

Summary

Canaan Creative stock’s price will continue to depend on the confidence countries have in Bitcoin and other cryptocurrencies.

Disturbing stances such as the ones taken by China and Tesla will continue to influence the performance of Canaan’s stock in the future.

Deals with companies instead of individuals will give the company an advantage to existing for a long time, as companies have better long-term outlooks compared to individuals.

Despite headwinds, the Canaan Creative stock will surely perform better in the years to come, judging from its 2021 performance. Increasing adoption, formulation of new crypto-related laws, and approval of complex crypto derivatives will all serve as tailwinds for CAN stock in the months ahead.