Marathon Digital (MARA) Stock Squeezes Higher as Bitcoin Recovers

Source: rafapress /

What a start to the year for crypto — and many crypto-related stocks. Marathon Digital (NASDAQ:MARA), a leading Bitcoin (BTC-USD)-mining company, has seen its stock price surge to roughly $27 per share to start the year, only to dive below $15 per share recently at its low. However, today’s 11% upside move in MARA stock has reignited interest around the name as a way to play the crypto space.

Today’s move in Marathon Digital has been driven in large part by a similarly impressive move in Bitcoin prices. As of early afternoon trading, Bitcoin has surged more than 5%, providing higher-leverage companies dependent on the price of Bitcoin with much larger upside moves.

Additionally, interest is building around Marathon Digital as a way to play a potential short-squeeze in the crypto sector. With more than 20% of the company’s float currently sold short, the ingredients for a squeeze are there, and investors are now seemingly placing their bets.

With that said, let’s dive more into what to make of today’s price action in Marathon Digital.

Why Is MARA Stock Surging Today?

As a Bitcoin miner, the directional moves in Bitcoin prices over various time frames can lead to outsized gains or losses for a company like Marathon Digital. That’s mainly because the company’s revenue is denominated in Bitcoin while its debt is denominated in dollars. Thus, the company’s balance sheet can see outsized moves when the USD/BTC exchange rate changes significantly.

With Bitcoin now about $41,000 per token, fears of a continued slide appear to have abated. This move higher in Bitcoin appears to be tied to slowing fund outflows from spot Bitcoin ETFs, a worrisome trend that drove a significant amount of recent selling pressure for Bitcoin and other major tokens. With more than $744 million in net fund inflows since the launch of these products, there’s significant room for additional capital to flow into this sector. Some analysts have anticipated that $50-$100 billion could flow into spot Bitcoin ETFs over time. So, maybe this is just an initial selloff at the tip of the iceberg with respect to fund inflows.

Additionally, weaker-than-expected PCE inflation data has spurred bets that the dollar could weaken, bolstering Bitcoin’s value further. As a hedge against a strong dollar and a weakening economy, Bitcoin’s value (and therefore that of Marathon Digital) can see near-term strength on weaker economic data.

Overall, there are a number of factors supporting Marathon Digital today. While I think these catalysts could turn out to be near-term in nature, this stock will undoubtedly remain among the most-watched in the market, for good reason.

On the date of publication, Chris MacDonald 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 Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.