BitMine stock price jumped by 15% on Friday, and this trend is continuing today, Jan. 5, as Ethereum and the broader crypto market rebounded. The BMNR stock rose to a high of $31, up sharply from this month’s low of $27. It has formed a highly bullish pattern despite the risk of dilution.
BitMine Stock Has Formed a Highly Bullish Pattern
The daily timeframe chart shows that the BMNR stock price has rebounded in the past few days. It has moved from a low of $27 last week to the current $34.
Most notably, it has formed a double-bottom pattern at $27 and a neckline at $42.20, its highest point on December 10. This pattern is one of the most common bullish reversal patterns in technical analysis.
The double-bottom level coincided with the ultimate support of the Murrey Math Lines tool. It is common for a stock to rebound whenever it hits that support level.
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Therefore, the most likely scenario is that the BitMine stock price continues to rise, with the initial target being the neckline at $42.
The target of a double-bottom is established by measuring the distance between the neckline and the double-bottom level. In this case, the depth is about 38%. Measuring the same distance from the neckline gives a target of $57.
This target aligns with the top of the Murrey Math Lines’ trading range, which is about 90% above the current level. A drop below the $27 support will invalidate the bullish outlook.
BMNR Stock Could Rise Despite Massive Dilution Risk
BitMine stock will likely rebound despite the upcoming dilution risk. Shareholders will vote on whether to increase the number of outstanding shares from the current 500 million to 50 billion.
In a statement, Tom Lee justified the massive at-the-market (ATM) expansion. He said the expansion will give the company the option to raise capital in the future.
BitMine also noted that it will help to execute opportunistic deals in the future. Also, the share expansion will help to accommodate future share splits, as he expects it to keep soaring because it correlates with Ethereum.
However, analysts have warned that BitMine does not need such a big increase in outstanding shares. For one, it only needs about 190 million shares to hit the 5% Ethereum ownership.
Also, analysts note that while Lee said it was not about diluting its shareholders, his first goal is to execute selective capital raises, which are a form of dilution.
Still, on the positive side, BitMine has the potential to do well. For one, it has started to stake its Ethereum hoard. BitMine aims to hold about 6 million ETH tokens.
With a current staking yield of 2.88%, the company will earn at least 172,800 coins. Ethereum price stands at $3,128, meaning it can generate over $540 million in high-margin revenue per year.
The company can then use these funds to accumulate Ethereum, pay dividends, repurchase its stocks, and make further investments.
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