Marathon Digital Shares Are Fighting the Crypto Crash

The first step in considering Marathon Digital (NASDAQ:MARA) stock as an investment idea is to accept crypto concepts. This is easier in theory than in reality for a giant portion of the population. Slowly but sure they are coming around, but from completely different angles.

a digital graph overlayed over hands typing and a pile of crypto coins
Source: Shutterstock

I recently debated crypto coins at the gym. I went to work out and instead I gave a lecture. These were funny moments because most of the participants are very new to investing. I have known these people for almost a decade and not once have we debated stocks.

If not for Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD), Dogecoin (CCC:DOGE-USD) and Shiba Inu (CCC:SHIB-USD), they would still not have a clue as to what I do.

About MARA Stock

Onto the MARA stock and its merit inside this crypto-craze. First, let’s not call it a craze because BTC is here to stay. Something that’s worth more than $40,000 per unit deserves some respect.

I hesitate to use the term “currency” because it is not yet stable enough. That’s where I think the bulls lose most of their arguments. The point of crypto and e-coins now is that they are a value vessels. You know what else is such an instrument? Gold! Yes, BTC is just like gold, only more valuable.

The main reason these asset classes are expensive is because people say so. The fact that I agree or not is immaterial to their value. For ancient reasons, humans decided that gold is valuable and that we should covet it. For more modern reasons, millions of people now think the same of cryptocurrency. I can even argue that the technology behind this boom will serve a big service going forward.

On the other hand, gold serves no functional purpose. The pandemic pushed the globe into faster digitization of finances. We will need the technology to evolve and quickly. BTC and other cryptocurrencies help do that.

MARA Shares Are Not Cheap

The tricky part when dealing with MARA is its profit-and-loss statement. The traditional metrics don’t work here. From that perspective, MARA stock has 175 years worth of “sales” already in the price. Clearly that’s expensive, but to judge it fairly I will use the actual price action in the charts. They say price is truth and that’s an absolute that I can draw. I am confident that it will help me avoid obvious mistakes when trading it.

For example, when MARA stock was rallying into $50 per share, I would have raised the alarm. Up there it’s a clear case of chasing, which may work for momentum traders. Successful ones are fast enough to buy high and scalp profits higher. Investors, on the other hand, fall for the trap and become holding the proverbial bag. Since then the stock shed 65% of its froth so down here it looks like an opportunity.

It’s not cheap since value is not an asset yet. But it is at a technical base zone that should hold for now. MARA stock is sensitive to the price of BTC and it, too, is having a moment. The headlines blamed Tesla (NASDAQ:TSLA) CEO Elon Musk for it. In reality it’s just regular price action.

Form an Independent Opinion

MARA Stock Chart Showing Potential Base
Source: Charts by TradingView

The idea of froth is already a challenge for the king of e-coins. A few bad days will do it good because it shakes out weak hands.

The strategy with crypto is to add over a long stretch of time. As long as the entry points are very far apart, it is a viable age-old strategy. Ironically, this was the same concept for investing in gold for decades. Therefore, timing the entry into MARA stock all at once is not ideal.

Investors could start longs here and add more as price unfolds. The actual base for the huge 2021 rally was from $16 per share. There is another cluster of support just $4 below it. The stock has already triggered bearish technical patterns. The correction has almost filled all targets, so it’s likely in support. There might still be room to go if the machines want to be perfect with it. Consequently, the bulls need to stamp it with a medium conviction label at best.

On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Nicolas Chahine is the managing director of SellSpreads.com.


Article printed from InvestorPlace Media, https://investorplace.com/2021/05/mara-stock-price-fighting-the-crypto-crash/.

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