Ethereum Price Forecast: ETH drops 7% despite BitMine's $1.1 billion purchase

Ethereum price today: $4,140

• Ethereum treasury company BitMine purchased 264,378 ETH, worth about $1.1 billion, last week.
• The company entered a $365 million purchase agreement and issued a $913 million stock warrant.
• ETH has declined below its 50-day SMA for the first time in two months and is eyeing a bounce off $4,000.

Ethereum (ETH) saw a 7% decline on Monday amid BitMine boosting its holdings to 2.4 million ETH over the past week.

BitMine scoops 264K ETH, plans $1.28 billion stock sale

Ethereum treasury firm BitMine Immersion (BMNR) said that its Ether holdings have reached 2.4 million ETH, valued at over $10.13 billion, according to a statement on Monday.

That is, it added 264,378 ETH, worth about $1.1 billion, since its last announcement on September 15.

The Nevada-based firm has total holdings of $11.4 billion, which also comprises 192 Bitcoin (BTC), a $175 million stake in Worldcoin treasury company Eightco Holdings, and $345 million in unencumbered cash.

BitMine also revealed on Monday that it had entered into a purchase agreement with an unnamed institutional investor to sell 5,217,715 shares of its common stock at $70 per share, expecting gross proceeds of $365.2 million.

"BitMine has raised $365.24 million by selling our stock at a 14% premium to Friday's close. By selling shares at $70 per share, compared to our $61.29 closing price, this is materially accretive to existing shareholders as the primary use of proceeds is to add to our ETH holdings," said Thomas Lee, BitMine's Chairman.

The deal also involved a warrant to purchase 10,435,430 shares at a strike price of $87.50 in a direct offering. With $913 million in cash expected if the warrant is exercised in full before or on its March 22 expiry, BitMine could receive total proceeds of $1.28 billion when combined with expected proceeds from its common offering.

Following the announcement, BitMine shares fell nearly 10%, trading around $55 at the time of publication on Monday. The move aligns with a broader decline in the cryptocurrency market and related stocks.

BitMine pivoted to an Ethereum treasury strategy in June, after initially raising $250 million in a private placement involving Peter Thiel's Founders Fund, Galaxy Digital, and Pantera Capital, among others.

BitMine is the largest among several publicly-traded Ethereum treasuries, which hold a combined 4.15 million ETH, according to data from the Strategic ETH Reserve website.

Ethereum Price Forecast: ETH declines below 50-day SMA, eyes a bounce off $4,000

Ethereum experienced $516.3 million in futures liquidations over the past 24 hours, with $489.6 million attributed to long liquidations.

ETH saw a 7% decline over the past 24 hours, plunging below the 50-day Simple Moving Average (SMA) for the first time in over two months. The top altcoin is testing the support around $4,000, a level that bulls defended following a similar decline in mid-August.

ETH/USDT daily chart

A further drop below $4,000 could send ETH to find support near the 100-day SMA.

The Relative Strength Index (RSI) has declined below its neutral level, and the Stochastic Oscillator (Stoch) has entered its oversold region. While the indicators suggest a dominant bearish momentum, oversold conditions in the Stoch could lead to a potential bearish exhaustion.