Key Insights
- BitMine stock has rebounded and reached its highest level since May this year.
- Ethereum price has formed a golden cross pattern as ETF and staking inflows jump.
- The company’s dollar-cost averaging strategy for purchasing Ethereum is proving effective.
Tom Lee may be getting the last laugh as signs show that his dollar-cost averaging strategy has worked perfectly. BitMine stock has jumped to $22.83. That’s its highest level since May this year and much higher than the year-to-date low of $12.7.
This rally may continue now that there is an Ethereum ETF. Also, the staking inflows are soaring and it has already formed a golden cross pattern.
Ethereum Price is Benefiting from Staking and ETF Inflows
ETH price has jumped in the past few days, moving from the year-to-date low of $1,508 to $2,451 today. There are reasons to believe that the coin has more upside to go as demand keeps rising.
Spot Ethereum ETFs added over $184 million in assets on Friday, bringing the weekly inflows to $697 million. They have added close to $1 billion in inflows this month, a sign that investors are buying the dip.
The same is happening in the staking market. Data shows that its staking market capitalization has jumped to over $103 billion. Its staking ratio has recently crossed the important milestone of 35%. The total staked coins are over 42.3 million, a trend that continues to rise.
Staking inflows indicate that investors are looking to lock up their coins for longer and take advantage of monthly distributions. This growth likely explains why the amount of Ethereum on exchanges has continued falling this month.
The ETH price also has some highly encouraging technicals. It has just formed a golden cross pattern as the 50- and 200-day weighted moving averages (WMAs) crossed. This pattern normally leads to more gains over time.
BitMine’s DCA Strategy Has Worked
If the Ethereum price rebounds completely, it will be a sign that Tom Lee’s dollar-cost averaging (DCA) strategy has worked perfectly.
DCA is a strategy where an investor buys an asset in small chunks, even when the price is falling. The hope is that all the purchases will become profitable once the price turns around.
In BitMine’s case, the company has been buying small amounts of ETH tokens each week since July last year. It continued these purchases even when the coin plunged to $1,500.
It now holds over 5.8 million coins and is about to hit its 6 million target. In this case, the coins it bought when ETH dropped to $1,500 have already seen their value jump by over 60%.
All this is happening as BitMine nears an inflection point, since its ETH buying strategy is nearing the 6 million target. After this happens, the company will accelerate its revenue generation through staking. The current staking reward is 2.66%, meaning that the 6 million coins will generate 159,600 coins a year.
At the current price, these coins would be worth over $391 million. If the company decides to stake the 180,000 coins, all the rewards and staking income will be 234,037 in the next decade.
That’s a substantial amount if ETH continues rising. BitMine hopes to use the staking revenue to pay its dividends and share buybacks to investors.
BMNR Stock Price Technical Analysis
The daily chart shows that the BMNR stock has rebounded after bottoming at $12.7 in July this year. It has remained above the ascending trendline that links the lowest swings since June this year.
The stock has also moved above the 50-day and 200-day Weighted Moving Averages (WMA). At the same time, the MACD and the Relative Strength Index (RSI) have continued to rise.
It’s a sign that momentum is rising. Therefore, the stock will likely continue rising as bulls target the key resistance at $30.
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