- BitMine stock price has remained in a narrow range for months.
- The stock will likely rebound in the coming months as dilution ends.
- Technicals point to an Ethereum and BMNR stock surge.
BitMine stock price has gone horizontal in the last three months, even as the S&P 500 and Nasdaq 100 indices have soared to a record high. BMNR was trading at $21.40, inside the narrow range it has been in for a while. Still, chances are that the stock will bounce back in the coming months as investors price in the end of dilution.
BitMine is a Future Free Cash Flow Machine
There are three main reasons why the BMNR stock price has remained in a narrow range in the past few months. First, Ethereum, its core product, has remained in a bear market after falling by double digits from its highest point last year. It was trading at $2,278 on Friday, down from the all-time high of nearly $5,000.
The ongoing performance of Ethereum has led to substantial unrealized losses. Its most recent results showed an unrealized loss of $3.7 billion in the first quarter of this year.
Second, the stock has wavered as the company continues to dilute its shareholders each week. It does that by selling over 6 million shares to raise the capital it needs to keep its Ethereum accumulation. It has bought over 346k coins in the last 30 days, bringing its total ownership to 5.078 million coins worth $11.56 billion.
Third, the performance is in line with that of other popular Digital Asset Treasury (DAT) companies, such as Strategy, American Bitcoin, Metaplanet, and Strive, which have remained in a narrow range over the past few months as investor demand waned.
READ MORE: Circle Stock Price Rally Has Stalled: Here’s Why it May Soar Soon
Potential Catalysts for the BMNR Stock Price
On the positive side, there are some potential catalysts for the BMNR share price. First, technicals suggest the Ethereum price will eventually rebound in the coming months, as it has formed an ascending triangle. This pattern consists of a horizontal line and an ascending trendline.
Ethereum has also flipped the Supertrend indicator from red to green and moved above the 50-day Exponential Moving Average (EMA). These patterns point to more gains in the upcoming days or weeks. If this happens, the next key target to watch will be at $3,000.
Second, BitMine will soon complete its Ethereum purchases as it will hit the 6 million target in the coming months. When this happens, the dilution will likely end, and focus will shift to its free cash flow.
BitMine’s primary source of cash flow is staking. Its goal is to stake the 6 million tokens in its balance sheet. It will eventually make nearly 180k coins a year, which it will use to repurchase its stock, make strategic investments, and pay dividends.
The staking approach will make it a free cash flow machine. For example, if the Ethereum price jumps to $12,000, as Tom Lee predicts, its revenue will exceed $2.1 billion. For a company with just a handful of employees, all these funds will go into shareholder returns. At the same time, its 6 million coins will be worth over $72 billion.
Finally, BitMine has contrarian technicals as the chart above shows. The three lines of the Bollinger Bands have narrowed substantially in the past few months, which may trigger a rebound. Also, the stock is now in the accumulation phase of Wyckoff Theory, which will lead to further gains as it moves into the markup stage.
READ MORE: Pi Network Price is Rising Ahead of Consensus: Will the Gains Hold?
