BMNR Stock Analysis: Top Reasons Tom Lee’s BitMine Will Rebound

Key Insights

• The BMNR stock price has formed a falling wedge pattern on the daily chart.
• BitMine will generate millions of dollars in revenue a year through staking and interest income.
• Ethereum has some of the best fundamentals, which will fuel the stock’s recovery.

The BMNR stock price has been in a freefall since July last year, moving from a record high of $160 to the current $20. This crash happened as demand for Digital Treasury (DAT) companies dropped and as Ethereum price slipped by over 60% from its all-time high. This article explores some of the top reasons why BitMine stock will ultimately bounce back in the coming months.

BitMine Stock Price to Rebound Because of Strong Ethereum Fundamentals

One major catalyst for the BMNR stock price is that Ethereum has some of the best fundamentals in the crypto industry.

This is important as BitMine is the biggest Ethereum holder in the industry with over 4.285 million tokens worth over $8.6 billion. It continues to accumulate Ethereum, buying 142,625 coins in the last 30 days, and now owns 3.5% of the circulating supply.

BitMine, unlike other DAT companies, has a closed-end accumulation strategy in that it plans to own 5% of the total supply.

Ethereum has strong fundamentals, including declining supply on exchanges. Data compiled by CryptoQuant shows that the supply of ETH tokens on exchanges has crashed to its lowest level since 2016, continuing a trend that has been underway for years.

Ethereum supply in exchanges | Source: CryptoQuant

More data shows that the staking queue has continued to rise over the past few months and now sits at the highest level on record. Over 4 million ETH tokens are waiting to be staked, while 32k are waiting to exit the queue. A rising staking queue is a sign that more long-term investors are waiting to hold the coin.

Ethereum staking queue | Source: X

Ethereum price will also benefit from the ongoing transaction boom. Data compiled by Nansen shows that the number of transactions, fees, and active addresses continued soaring. The network handled over 71 million transactions in the last 30 days as its active addresses jumped by 35% to over 15 million.

The strong Ethereum outlook explains why Wall Street analysts are bullish on the company, with the average analyst estimate at $43, well above the current $20.

BitMine Approach and Potential Income Company

Another bullish catalyst for BMNR’s stock price is BitMine’s strategy, which differs significantly from MicroStrategy’s. Unlike Strategy, the company’s goal is to buy 6 million coins and stake them, a move that will generate monthly income.

The company hopes that this strategy will lead to regular, high-margin revenue, as the current staking yield is 3%. For example, using the current market cap, the company will make over $258 million in annual revenue.

BitMine also has over $600 million in cash in its balance sheet and no debt. Assuming the company earns a 4% return, it generates $24 million in annual revenue.

These numbers are important as the company operates an asset-light business with fewer than 10 employees and minimal physical locations.

Additionally, the company has made investments that could lead to higher long-term profits. The most recent investment was in Beast Industries, the company owned by Mr. Beast. This investment offers a significant opportunity, especially now that the company is developing decentralized finance tools. MrBeast is also the world’s biggest media professional.

BMNR Stock Price Technical Analysis

The daily timeframe chart shows that the BitMine stock price has crashed in the past few months, moving from a high of $65 in October last year to the current $20.

A closer look shows that the stock has formed a giant falling wedge pattern, composed of two descending, converging trendlines.

BMNR stock price chart | Source: TradingView

The two lines of this pattern are nearing their confluence, suggesting a strong bullish breakout in the coming weeks. If this happens, it will rebound, potentially to the key resistance level at $35.

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