Marathon Digital Stock Forecast: MARA adds another 7% as Bitcoin continues rally above $61K

UPDATE: MARA stock didn't give up on Wednesday and is now trading above $32.50, up 7.5%. This comes as Bitcoin hoisted itself above $61,000 for the first time in more than two years on Wednesday. Rumors are circling that OTC desks are running out of Bitcoin to sell and have now turned to exchanges to replenish their holdings.

Marathon Digital (MARA) stock rode the Bitcoin price wave on Tuesday. MARA shot up more than 12% at Tuesday’s open, while Bitcoin (BTC) advanced a solid 7% to $57,100 — its highest level since December of 2021 — before retracting to $56,800.

Marathon Digital, a Bitcoin and crypto miner in addition to other ventures, hit its highest share price since January 2022. However, MARA stock lost some of its luster as the session progressed, and its rally diminished to 4.25% by the session close.

The wider market is mixed on Tuesday after US Durable Good Orders and Consumer Confidence figures both underwhelmed economists’ consensus. The Dow Jones sank 0.25%, while the NASDAQ and S&P 500 gained moderately. 

Marathon Digital stock news: Halving narrative helps spur Bitcoin price

Several narratives and news bites have joined hands to lift Bitcoin’s prospects of late. First, the advent of spot Bitcoin ETFs in January created a whole new doorway for the asset as money poured into at least 11 funds that have been approved by the Securities & Exchange Commission (SEC). Word is that more are on the way.

All this new capital means that spot Bitcoin ETFs now account for 40% of the value of all Gold ETFs in just under two months. The ETFs make it easier for large investors to seamlessly invest in Bitcoin in the same way they would equities. Some ETF experts are already saying that Bitcoin ETFs will surpass the value of Gold ETFs in just two years. 

Then despite Bitcoin conquering the $50,000 level in just the past month, MicroStrategy (MSTR) announced it would spend $155 million on acquiring another 3,000 BTC. This was a sign of confidence from the software corporation that has pinned its entire legacy to the king of crypto coins. 

Additionally, the entire crypto ecosystem is staring with suspense as the calendar ticks inevitably toward the next Bitcoin halving. The current estimate based on mining hash rates is that the halving will commence in 58 days. This means that the current block reward handed out to Bitcoin miners like Marathon Digital of 6.25 BTC will be halved to 3.125 BTC. While miners gain less Bitcoin for their troubles, the price of Bitcoin tends to skyrocket in the 18 months following a halving. 

Just last week, Marathon Digital launched a new service called Slipstream. The unit "is a direct Bitcoin transaction submission service designed to streamline confirmations of large or non-standard Bitcoin transactions."

Meme stocks FAQs

What is a meme stock?

Meme stocks are stocks favored by retail traders – but not by professional or institutional traders – that grow popular through its backers publishing memes on social media websites to win converts. Images or GIFs are typically used to transmit some type of excitement, committment or comedy regarding investment in the stock. These stocks normally are beaten down names that appear to have an uncertain or dour future based on falling sales figures or rising losses. Interest in these names normally comes from either belief in a turnaround story or its heavy short ratio.

How do meme stocks become popular?

Online investing forums like Reddit’s r/WallStreetBets are known to be breeding grounds for meme stocks. Normally, some small group of posters begin making memes of a stock they are buying. If the argument behind it is cogent or even just funny, the memes may provoke other retail investors to jump aboard. Interestingly, the merits of a stock are normally immaterial to it becoming a popular meme stock other than it being abandoned by the wider market and thus cheap. Stocks with high short ratios are usually likely to become meme stocks, because the nature of the argument for investing in the stock is that it can be the subject of a short squeeze.

What is a short squeeze?

A short squeeze is when investors swiftly buy up the shares of a heavily-shorted stock. Because the stock is heavily shorted, there is a dearth of available shares to purchase. This allows smaller volumes of buying to push the stock’s price up more easily. Since the share price suddenly rises, short-sellers need to purchase the stock to close out their short positions. This rapid buying and closing of short positions produces an unusually low level of supply that causes the price of the stock to rise rapidly. This type of short squeeze was the result of the first meme stock craze regarding GameStop.

What are the most famous meme stocks?

Besides GameStop – the ur-meme stock – there have been a number of other meme stocks. Two of the most popular are AMC Entertainment and Bed Bath & Beyond. AMC CEO Adam Aron used the popularity of AMC shares among the retail class to effect a secondary offering that raised enough money to stave off bankruptcy during the 2020-2021 pandemic. Bed Bath & Beyond saw a flurry of volatile trading but eventually went bankrupt in April 2023.

Marathon Digital stock forecast

Marathon Digital stock pulled back quickly on Tuesday from its two-year high at $32.87. That is of course a bad sign, but the new range high should provoke further entry from bulls. 

The $30 to $32 range provided support for much of 2021 and part of 2022, so traders will watch to see if MARA manages to use this price level as a base. Only a few weeks ago, MARA was trading near $16. 

MARA daily stock chart

Despite MARA stock's recent spike in share price, the Relative Strength Index (RSI) sits at 65. That is a decent level for bulls since MARA stock does not yet look overbought here. The 70 RSI level is typically viewed as the threshold for an overbought status.

Another point of pride for bulls is that the 20-day Simple Moving Average (SMA) just recently overtook its 50-day SMA counterpart. This means that a longer rally is likely to enfold. The last time this happened, the November 15 to December 27 rally of 2023 was brought about.