Major Bitcoin mining companies are forming a rare technical pattern known as the death cross, indicating potential further declines.
What is a Death Cross?
A death cross occurs when the 200-day and 50-day moving averages cross each other, often indicating further downturns. This pattern is considered a bearish signal for stocks.
Marathon Digital and CleanSpark Stocks
On September 6, Marathon Digital, the largest mining company in the industry, dropped to $13.75, its lowest swing since December of last year. It has fallen by 60% from its highest point this year, erasing over $4 billion in value. Similarly, CleanSpark shares crashed to $8.39, the lowest point since February, and are 66% below their highest level this year. Its market cap dropped from $5 billion in March to $2 billion. Other Bitcoin mining stocks, such as Riot Platforms, Core Scientific, Cipher Mining, and Argo Blockchain, have also continued to fall. Notably, Marathon Digital and CleanSpark have formed a death cross pattern, indicating further downside.
Bitcoin Production and Price Decline
Mining companies face challenges due to low Bitcoin prices and weak production. Bitcoin dropped below $55,000, reaching its lowest point since August 7. It has fallen by 25% from its highest point this year and by 15% from its August high. Bitcoin’s sell-off may continue as it is close to forming a death cross. Mining companies are also producing fewer coins due to the recent halving event. Marathon Digital produced 673 coins in August, down from 692 in July and 850 in April. Similarly, CleanSpark produced 478 coins in August after producing 721 in April, while Riot Platforms mined 322 coins in August. The combination of lower Bitcoin prices and weak production indicates potential further declines in the revenue and market value of mining companies like Marathon Digital, Riot Platforms, and CleanSpark.
Therefore, the combination of lower Bitcoin prices and weak production suggests potential further declines in the revenue and market value of mining companies like Marathon Digital, Riot Platforms, and CleanSpark.
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