Riding the Bitcoin Tide: Can MARA Stock Bounce Back in 2024?
Marathon Digital (NASDAQ:MARA) stock surges when Bitcoin (BTC-USD) prices boom and sink when it falls. After conducting a Marathon Digital Holdings stock analysis, we’re currently seeing the latter playing out. The excitement over a Bitcoin milestone has died down, ending the “crypto comeback.” Nevertheless, don’t assume this means that a comeback for MARA is out of the question.
There is still potential for BTC to keep climbing in 2024. Out Marathon Digital Holdings stock analysis suggests shares would likely climb as well. Gains could even be outsized compared to Bitcoin given the impact of higher prices on Marathon’s operating performance. MARA may experience another wave of bullishness, even if Bitcoin remains steady.
A Marathon Digital Holdings Stock Analysis
Although company-specific factors (such as Marathon’s production output) played a role, the main driver of MARA’s late 2023/early 2024 rally was of course the big rally for Bitcoin that transpired during this time.
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As I discussed previously, Bitcoin surged in anticipation of the Securities and Exchange Commission (or SEC) giving Bitcoin exchange-traded funds the regulatory green light. The market believed that Bitcoin ETFs would bring new inflows of retail investor capital into this digital asset, with this increased demand resulting in increased BTC prices.
Between late October and early January, Bitcoin prices went from under $30,000 to over $49,000, or around a 63% increase. However, MARA stock appreciated to an even greater extent, skyrocketing from the high single-digits to prices north of $30 per share.
However, instead of continuing to rally following the SEC’s approval of Bitcoin ETFs on Jan. 10, crypto investors who bought on the rumor quickly sold on the news.
As of this writing, the sell-off has continued, especially for MARA. Only a few weeks after hitting a new 52-week high ($31.30), the stock has fallen back by about 44.6%, to around $17.35 per share.
Two Paths Back to Higher Prices
Given current price trends for BTC, don’t be too surprised if the MARA stock sell-off carries on the immediate term.
That’s not to say Marathon Digital is on the verge of coughing back all of its Bitcoin ETF-related gains, but a quick rebound probably isn’t in the cards.
So then, is it time to sell/avoid MARA? Not necessarily. There’s still substantial long-term potential with Marathon shares. While I won’t dwell too much about where BTC prices may head from here, crypto bulls have laid out a substantive long-term bull case for Bitcoin, based mainly on macro-related factors.
Another bull run for BTC would undoubtedly be a boon for Marathon. However, a Bitcoin comeback isn’t the only thing that can send MARA surging once again. Again, there is a path for shares to prosper, even if BTC itself languishes at or near current spot prices.
How? It all has to do with Marathon’s mining expansion efforts. For instance, during December, Marathon reported year-over-year mining production growth of 290%, with production rising 56% on a sequential (month-over-month) basis.
If this production growth translates into improved fiscal results, shares could soar once again, even if Bitcoin at that time is treading water.
Crypto Bulls: Keep Marathon on Your Watchlist
While Marathon Digital has not yet morphed into a “stay away” situation, there are several caveats. For one, while MARA could thrive even if Bitcoin enters a sideways market. It’s another story if the latest crypto boom transitions into a full-on crypto bust, or worse, another “crypto winter.”
A big drop in BTC prices would undoubtedly lead to a big drop for MARA, as it would have a tremendous impact on the company’s profitability. High fixed costs are a double-edged sword.
With this, conservative investors should stay away. So too, should those that are risk hungry, but nonetheless are skeptical about the whole long-term “story” with Bitcoin.
However, if you can stomach the risk, and are bullish on Bitcoin’s long-term prospects? MARA stock remains a name to keep on your watchlist. A further sell-off could open up a can’t-miss buying opportunity.
MARA stock earns a B rating in Portfolio Grader.
On the date of publication, Louis Navellier did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article had a long position in Bitcoin.
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