Analyzing the performance of Marathon’s digital stocks

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The price of Bitcoin has fallen from all-time highs reached on November 10, 2021, and many publicly traded bitcoin mining stocks have seen their prices fall with it. Marathon Digital Holdings (MARA) was no exception to this rule.

Business growth

His last two earnings reports weren’t his best results, but Marathon had a good year in 2021 overall. On January 3, 2022, Marathon liberated its 2021 and December updates, including these notable highlights:

  • Accumulated 3,197 self-mined bitcoins in fiscal year 2021 (846% increase year over year)
  • Increase in total bitcoin holdings to around 8,133 BTC
  • Total cash reached of approximately $268.5 million
  • Added 72,495 ASIC miners in 2021 (current mining fleet consists of 32,350 active miners producing approximately 3.5 exahashes per second [EH/s])

Above is a bar chart of Marthon’s hash rate, its percentage of the global hash rate, and its predictions for 2022 and 2023. Marathon’s declining percentage of the global hash rate while increasing its own hash rate suggests that its competitors were growing more aggressively than it was at that time. While Marathon continues to receive minors from its Bitmain agreement, it may need to be more aggressive in its expansion efforts.

successful marathon builds a new mining facility in Hardin, Montana, resulting in an increase in its hash rate from 0.2 PE/s in January 2021 to 3.5 PE/s in December 2021. Its next mining facility, ready for west texas, will be ready for operation in Q1 2022. If all builds follow schedule, Marathon will deploy all of its purchased miners by early 2023; the operation would consist of 199,000 bitcoin miners, producing around 23.3 PE/s, making Marathon one of the largest publicly traded bitcoin miners in the world.

Analyzing the MARA share price

Like many of its peers, Marathon’s share price has been closely tied to bitcoin prices. In March and April, MARA and bitcoin hit new highs and when the price of bitcoin fell in April, so did MARA shares.

In May and June, MARA stock continued to move with the movement of bitcoin: during the mining crackdown in China, the price of bitcoin fell below $33,000 and MARA stock crashed from almost 40% during this period.

These price movements did not end this summer – with the launch of two bitcoin exchange-traded funds (ETFs), bitcoin hit a new all-time high and MARA followed. MARA is one of the only bitcoin-adjacent stocks to hit a new all-time high when bitcoin did the same. This would suggest that MARA’s price is more directly correlated to bitcoin’s price than other bitcoin-adjacent stocks. It should be noted that while bitcoin is down around 40% at the time of writing, MARA is down almost 70% from its recent all-time high.

The main culprit for the decline in MARA in the fourth quarter is a summons from the United States Securities And Exchange Commission (SEC), asking Marathon to produce documents regarding the construction and financing of the Hardin facility. On the day of this subpoena, MARA shares fell 27%. While nothing came of that subpoena, the markets delivered their verdict. This is the largest candlestick on MARA’s daily chart and will carry a large amount of aerial resistance, but more on that later.

Marathon will share fourth quarter earnings data in March. But looking back over the past three years paints a picture of how far Marathon has come and how far it still has to go.

Marathon’s third quarter earnings missed projections by 0.65 due to its expansion efforts: building new facilities, buying miners from Bitmain and issue new shares. These efforts, coupled with the company’s HODL strategy (which has been in effect since October 2020), have driven operating costs up from the prior year. Although revenues are growing steadily, positive signs suggest that once these expansion efforts end, and revenues continue to grow as the expansions continue, earnings per share (EPS) should correct and contribute to raise the stock.

Publicly-listed bitcoin miner Marathon Digital has seen its stock price drop along with bitcoin.  So, does that make it a good buy?

Source: Trading View

Analyzing MARA’s daily chart, the stock has been in a strong downtrend (blue line) since hitting all-time highs on November 10th. While this downtrend has been going on for over two months now, with some areas of support ahead, we should see a break in this downtrend soon.

Significance of short term highs/lows, gaps, candlesticks and resistance are clues that have been left on a chart by the big bucks on Wall Street. Analyzing charts and their indices allows us to better judge a stock’s reaction in certain areas.

The chart below showed the support (red lines) and resistance (green lines) areas. These support and resistance areas can be used as markers for when to buy and sell stocks. An example of a strategy would be if volume declines as the stock approaches a red support line, taking a position (buying stock) as close to the support area as possible gives the trader more room to let the stock bounce back to a support zone. resistance. If volume increases as we approach resistance and it breaks above it, a new support zone is created and this would become the minimum exit price once the stock starts falling.

The colors signify where our expectations should be if these lines are broken – if the stock breaks below the red line of support, then we will most likely continue lower, to the next support zone (and vice versa for areas resistance). I have listed the support and resistance areas with numbers corresponding to the line number on the chart.

Publicly-listed bitcoin miner Marathon Digital has seen its stock price drop along with bitcoin.  So, does that make it a good buy?

Source: Trading View

Support

  1. This area is our first line of defense in the sand. These are the lows from last week which have not yet been broken, the upside gap and confirmed support from August and the downside gap from May which was the previous resistance until the mid -June.
  2. This is an area of ​​confirmed support that has not been tested since late July, resistance and bullish gap bottom in January, and bearish gap bottom and resistance in May
  3. The end of July low (this has not been tested and could be nothing, given its proximity to zone four). At least one of them will be support (potentially slightly higher, above 21m and close to where the close was rather than the day’s low)
  4. The $20 price level is a psychological figure that should prove some level of support. It is also near the bottom of a bullish gap from January 2021.
  5. May stocking, which has not been tested

Resistance

The major moving average lines that I like to pay attention to are all above the current price level. These moving averages are the 21 days exponential moving average (EMA, pink line), 50 days simple moving average (SMA, orange line) and 200 day simple moving average (white line) and will all be resistance areas going forward.

  1. Low of last Wednesday’s big red candlestick. Due to its size relative to other nearby candlesticks and the higher volume for the day, there will be resistance somewhere in this candlestick, and given the action’s inability to close inside of the body of the candlestick, the low of this candlestick quickly became a resistance.
  2. The middle of this candlestick corresponds to the December short-term low. This was also resistance in early July that triggered a sharp, sharp selloff for 13 straight trading days.
  3. The top of the candlestick matches the high of that July day that triggered the 13-day sell-off. This may be another example of just one of these areas being true resistance.
  4. Bottom of a downward gap from December 27 to 28. This is the same area where the 200-day SMA is currently located.
  5. The short-term high reached on December 27 was an unsuccessful attempt to break above the 21-day EMA; the top of a bullish gap from October 8-11, which was immediately tested as support. If MARA breaks higher, the momentum to retake the $40 price level should force the stock higher. Expectations for a further breakout would be close to 80% once MARA breaks above $40.
  6. The next expected resistance zone is around $45: the short-term high reached in September
  7. The $50 price level is not far from the previous all-time high reached on February 17; the support zone for the last two weeks of November
  8. All final resistance areas are tied to the largest candlestick seen on November 15 (the date of the SEC subpoena). This candlestick represents about 25% in total. This gives a wide range for the stock to trade without going out of bounds. This is prime real estate for options trading for those more focused on this style of trading.

Based on the current chart position, no traditional chart pattern has formed, suggesting that we are in a period of base building. The huge sell off from the highs is higher than most sell offs when building a base. The sell-off period during this base-building period is above a healthy base, but given MARA’s volatility over the past couple of years, that’s not unreasonable.

Although there is no proper base and MARA is under a huge downtrend, it is not a buy at the moment. However, more aggressive investors can attempt to use the breakout of the downtrend line coupled with the support and resistance areas to help set expectations with the trade.


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