The discussion today is about the opportunities that lie in Marathon Digital (NASDAQ:MARA) stock. But since it is a crypto company, we have to discuss that topic first.
I’ll start with the conclusion first and then back into why MARA.
Crypto is not a currency nor does it need to be. Gold isn’t, yet investors accept it as an asset class. The bottom line is that they are both investment vehicles. Real or fake, Bitcoin (CCC:BTC-USD) is the king of crypto and is the best performing asset bar none. You don’t have to like it or believe in it do appreciate its profits.
Every crypto debate with friends and family always go the same way. It’s like we’re discussing it for the first time every time. Skepticism reigns borderline on utter disgust. Meanwhile, they overlook the value crypto holds.
Yes, it is volatile and that’s human nature. It will take years to gain acceptance, and MARA stock is basically on the ground floor of that opportunity. People need to get over to hump soon, so they can start partake in the opportunity.
There Are Early Stages
Marathon Digital is participating in this digital revolution by mining for the asset. It is in its infancy stages, so the discussion today will not include “value” as a selling point. The financial metrics are useless at this stage. The opportunity lies in what management is doing strategically. They are based in the U.S., so there is inherent transparency there.
When a company’s fundamental arguments are weak, I rely more on charts. Earlier this year, Bitcoin suffered a correction that dragged MARA stock with it. I saw an opportunity as it fell into support on charts. After I wrote about MARA stock in May it rallied 125% and it remains 85% higher.
The situation now is different since the bulls are in charge. Even after a 25% September correction, MARA is setting higher-highs and higher-lows. The fans are buying dips and holding an ascending trend. Earlier I compared crypto to gold, so investors should accumulate it over time. Since the company business is to mine for crypto then the strategy should carry to MARA stock.
It makes sense for investors to break up entries to the position into pieces. This lessens the odds of making grave mistakes. Going all in, even in “normal” stocks, is not ideal. Doing so in one like this is flat out wrong. Investors should know it’s unrealistic to nail a perfect entry.
MARA Stock Needs Time
The trust in MARA stock can only come from proof over time. Wall Street has already adapted to the idea that crypto investing makes sense. They can’t argue with the capital appreciation that the sector has created. Companies like this one will eventually gain more trust by proxy.
Technically, I am confident in the progress that MARA is making. There are technical threats especially if it falls below $32 per share. This could bring a 20% bearish stint from there. The base that it established in May should be solid, therefore buy-able if it happens.
There are extrinsic risks, such as from regulatory changes. Countries and states are at odds with the impact that crypto has had. It is global and somewhat free, and its popularity must be unsettling. Surprise headlines could ruin a good thing, so I consider this a speculative investment. Investors should use appropriate size for the opportunity that suits their personal risk tolerance.
Another direct threat to MARA stock is the price of crypto. Bitcoin corrected more than 20% in September. If it loses $40,000, it could lose another 15% quickly. This will bring the MARA negative scenario we noted earlier. They should both find footing there.
I would speculate that our future won’t revolve around cash. I’ve never seen a futuristic science fiction movie that deals with cash. Crypto is a digital asset most likely bringing about the currency digital revolution. Those who hold out too long will be playing catch up.
On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Nicolas Chahine is the managing director of SellSpreads.com.