Key Insights
- BitMine stock gained about 6% as Ethereum price moved above $2,700.
- BitMine increased its Ethereum treasury to 5.98 million ETH, or about 4.9% of supply.
- The company has 5.07 million ETH staked as it moves closer to its 5% treasury target.
BitMine stock advanced on Monday as Ethereum price broke above $2,700 and the company disclosed another increase in its ETH treasury.
BMNR traded around $27.45 in premarket trading, up about 5.7% from Friday’s $25.99 close. Ethereum traded near $2,730, up roughly 6% over 24 hours.
The company also disclosed that its Ethereum holdings had reached 5.98 million tokens. BitMine valued its crypto, cash, marketable securities and other investments at $17.1 billion as of Sept. 20.
BitMine Dollar Cost Averaging Strategy Has Worked Well
Tom Lee’s BitMine has engaged in one of the best dollar-cost averaging (DCA) strategies in corporate history. DCA is a process in which an investor allocates capital and continues to accumulate an asset over time, even when it is falling. It is often seen as a better alternative to buying an asset in a lump sum.
BitMine started its Ethereum accumulation in July last year, and today, has bought over 5.983 million coins. It has bought these coins each week, even when their prices dropped to $1,500 in July this year.
BitMine portfolio | Source: X
The benefit of the DCA strategy is that it helps users make more money when the price start rising. In this case, the coins that BitMine bought when it dropped to $1,500 have gained by 81% as the coin has jumped to over $2,700.
BitMine is now nearing its goal of having 6% of all Ethereum in circulation. Assuming this amount is 6 million, the company now needs to buy just 16,000 coins.
Ethereum Price Has Broken Out
The ongoing BMNR stock rally is happening because Ethereum has finally broken out. It formed a golden cross pattern on September 6 as the 50-day moving average jumped above the 200-day moving average.
Since then, the coin has been forming a bullish flag pattern, which is made up of a vertical line and a horizontal channel. This pattern usually leads to more gains over time.
The token has now moved above the upper side of the flag, confirming the breakout. It has also crossed the important resistance level of $2,460, its highest level on April 16 this year.
These technicals suggest that the coin has more upside to go. If this happens, it may jump to the next key resistance level of $3,000. A surge above that price will point to further gains towards $3,380, the highest level in December last year and January this year. A move above to that level would bring the current value of BitMine’s Ethereum holdings to over $20 billion.
BitMine Revenue to Jump if ETH Holds Gains
The ongoing Ethereum rebound is important for BitMine for two main reasons. First, it will help it to boost the value of its ETH holdings because it is now the biggest holder. The higher ETH jumps, the better its balance sheet becomes.
Second, the rally means that its revenue will continue rising. Unlike Michael Saylor’s Strategy, BitMine makes money by staking its Ethereum holdings and earns about 2.7% in annual return.
The company will likely hit its 6 million ETH holdings target this week. Assuming that the staking yield remains at 2.7% in the next 12 months, it means that the company will make 162k coins as revenue.
Also, assuming that Ethereum remains at $3000 in this period, its revenue will be $486 million.
BitMine Stock Has Crossed a Key Resistance
The daily chart shows that the BMNR stock has finally made a bullish breakout. It has jumped above the important resistance level of $27.17, which it has failed to clear since August. It was the upper side of the bullish flag pattern.
The stock is also about to form a golden cross pattern as the 50-day and 200-day moving averages have moved to $21.6 and $22.52, respectively. A crossover will lead to more gains, potentially to $30 and above.
This article is for informational purposes only and does not constitute financial or investment advice. Equity and cryptocurrency investments involve risk, and past performance does not guarantee future results.
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