BitMine Stock Risks Drop as Rare Pattern Forms, NAV Slumps

BitMine stock price dropped sharply in recent months. Investors pulled back as demand for DAT companies declined.

It dropped to a low of $40, down sharply from the year-to-date high of $160, leading to a $6 billion wipeout. So, is it safe to buy the dip as its key multiples drop?

BitMine Stock Price Technical Analysis

The daily chart shows that the BMNR stock price has been in a free fall over the past few months. It has declined from a record high of $160 to its current price of $40.

Technical indicators point to further stock declines in the coming weeks. The stock may recover only if Ethereum rebounds from its plunge.

This chart indicates that it has formed a rare bearish pennant pattern. It is composed of a vertical line and a symmetrical triangle. This pattern often leads to more downside, which is equivalent to the size of the flagpole.

The BitMine stock price has moved below the lower side of the pattern’s triangle. It is nearing the critical support level at $29.56, its lowest level since July this year.

This pattern often leads to more downside as it signals that bears have prevailed. The stock has crashed below the Ichimoku cloud indicator. On the other hand, the Relative Strength Index (RSI) continues to decline.

The Commodity Channel Oscillator (CCO) also continues to decline. The stock is likely to keep falling in the near term. Its initial target is $29.56, near the pennant’s lower edge.

A move below that level will indicate further downside, potentially to the psychological level at $20. A move above the triangle’s upper edge at $60 will cancel the bearish outlook. It will signal potential gains ahead.

BitMine NAV and Dry Powder are Crashing

The ongoing BMNR stock plunge is primarily because of the broader crypto market crash that has affected Bitcoin and most altcoins. Ethereum has plunged into a bear market after falling by over 30% from its highest level this year. It bottomed at a low of $3,000 and was about to move below that psychological level.

The falling Ethereum price hurts BitMine. It’s a company that has become the biggest holder of ETH in the world. It continued its accumulation spree last week, bringing its total holdings to 3.31 million.

Its holdings are now valued at over $10 billion, which is lower than the all-time high of over $13 billion. In some instances, falling Ethereum prices would be a positive thing for the company. This would allow it to buy more cheaply ahead of the rebound.

In this case, however, the company’s Ethereum holdings are at a $1.3 billion paper loss. Also, its average buying price was $3,900. At the same time, the company’s dry powder is drying. Dry powder refers to the amount of capital an investor has that is not yet committed or deployed.

Most importantly, the premium the company had a few months ago jas crashed. Data compiled by Artemis shows that the market NAV (mNAV) has dropped sharply to 1.2 from the year-to-date high of 5.6.

This means that its stock is trading closer to its holdings of Ethereum, Bitcoin, and other assets. A falling NAV multiple poses a risk to BitMine stock. It makes it harder for the company to retain investors. BitMine also struggles to raise funds to accumulate Ethereum.