A short squeeze may be developing in Bitcoin (BTC-USD) miner Marathon Digital (NASDAQ:MARA).
Today, MARA stock is being helped by a nearly 23% rise in the price of Bitcoin over the last seven days. As of this writing, the leading crypto coin trades hands for more than $21,000 per coin.
Shares of Marathon Digital stock rose more than 8% on Jan. 13 and another 9% over the weekend. This morning, MARA stock opened at $8.40 per share. That brings its market capitalization to nearly $1 billion. The crypto miner’s revenue for 2022 was estimated at about $150 million.
MARA Stock: Squeeze the Shorts
According to Fintel, MARA stock’s short interest recently came in at 38% — and at nearly 55% in off-exchange trades. Short traders borrow shares in hopes of a price decline but must eventually cover their positions.
Marathon Digital recently reported that it produced 475 Bitcoin during December and 4,144 BTC for the full fiscal year. That haul for the full fiscal year is worth more than $88 million at the crypto’s current price.
Generally, the price of MARA stock has followed the fate of Bitcoin, albeit with even more volatility. Shares traded for more than $30 less than a year ago but changed hands for as low as $3 at the end of 2022. The stock has now doubled in value in under a month.
Bitcoin bulls believe BTC could be worth far more. They cheered news that the market cap of all crypto went back over $1 trillion, with $500 million in short positions recently liquidated as well.
Crypto believers think slowing inflation may relieve selling pressure on risk assets. But Bitcoin is still well below it’s all-time high of more than $68,000 achieved in November 2021. Other bulls now insist that crypto is “ready to run,” predicting an “earthquake” in higher valuations. One has warned, however, that the fate of crypto is tied to the tech-heavy Nasdaq.
What Happens Next?
So, with all that said, where do I think crypto goes next?
After years of watching the crypto markets for InvestorPlace, I have come to agree with people like author Stephen Diehl that it’s all a Ponzi scheme. You can prove me wrong by finding a business model for it that works in the real world, rather than just in the crypto one.
On the date of publication, Dana Blankenhorn did not hold (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.
