The surge in Bitcoin miner Marathon Digital’s (MARA) stock, amidst the broader cryptocurrency fervor, has yielded remarkable returns in recent weeks. However, the rapid ascent raises concerns about the sustainability of these gains, signaling that the window to secure profits may be narrowing.
MARA stock witnessed an impressive surge of over 15% in today’s stock market, fueled by substantial trading volume, indicating sustained interest from a large pool of traders. This hot streak, commencing earlier this month, has propelled shares to trade 136% above their 50-day moving average.
Despite the current momentum, historical price action analysis by IBD suggests that MARA stock tends to experience a pullback when it surpasses 50% above the 50-day moving average. Given the current surge of approximately 160% this month alone, the stock appears overdue for a potential correction.
Traders sitting on substantial profits and maintaining a bullish outlook on the stock may consider adopting prudent position management strategies. One approach involves locking in partial profits during strength, offering a safeguard against potential downturns. Additionally, a downside reversal can serve as a signal to further trim positions. An alternative method is to wait for a close below the previous day’s bar, providing another opportunity to secure gains at elevated levels.
Technical traders may find the close below the 10-day moving average as a crucial level for their exit strategy. However, it’s worth noting that shares currently stand 37% above the 10-day line, implying a willingness to endure a substantial pullback before the sell signal is triggered.
Factors Behind MARA Stock Surge:
MARA stock’s meteoric rise aligns with heightened speculation on Wall Street regarding the imminent regulatory approval of ETFs tracking the spot price of Bitcoin. This anticipated approval is poised to attract institutional investors, offering exposure to digital currencies through securities.
Investors are anticipating various catalysts for Bitcoin in 2024, with “The Halvening” standing out prominently. This event involves halving the rewards for Bitcoin miners, aimed at curbing inflation and emphasizing transaction fees over mining. Crypto enthusiasts argue that The Halvening will contribute to a scarcity of supply just as institutional demand is poised to surge.
It’s crucial to understand that MARA stock generates revenue by calculating proof-of-work for validated transactions added to the blockchain.
While MARA stock continues to soar, investors are advised to exercise caution, recognizing the potential for a correction in the face of historical patterns and market dynamics.
