Tom Lee‘s BitMine Immersion Technologies (NYSE:BMNR) stock has crashed to a crucial support level, and the ongoing Ethereum performance suggests that it may continue falling further.
BitMine Stock Facing Headwinds as Ethereum ETF Outflows Jump
Ethereum is nearing a local correction after falling by 18% from its highest point in May this year. It was trading at $2,023 today, May 30, down by 30% since July when BitMine started its accumulation and 60% from its highest point last year.
The ongoing retreat means that its unrealized losses are rising. In its most recent results, the company reported a $3.8 billion unrealized net loss, and this trend may continue in the near term.
Ethereum’s fundamentals have continued to weaken this year. For example, data shows that spot Ethereum ETFs suffered $540 million in outflows in May, the worst month of the year. These funds have now lost nearly $1 billion in assets this year.
Ethereum’s dominance in key areas has also continued to worsen. For example, the total value locked (TVL) in its decentralized finance (DeFi) ecosystem has dropped to $42 billion from last year’s high of $88 billion.
Still, on the positive side, the ongoing Ethereum price weakness has helped BitMine to accelerate its dollar cost averaging (DCA) approach. DCA is a situation where investors buy a falling asset in a prolonged period in hopes of benefiting more when it rebounds.
Another positive is that the company is set to move from dilution to yield. It has spent the last 12 months diluting its shareholders as it raised cash to buy its Ethereum tokens. Once it hits the 5% accumulation target, the company will end its dilution and start focusing on its staking yield.
BMNR Stock Price Sits at a Crucial Support Level
BitMine stock chart | Source: TradingView
Technicals suggest that BMNR stock is hanging on a thread as it sits at a crucial support level. It has dropped to $19.27, a few points above the crucial support level at $18.30, its lowest point in February, March, and May.
The stock has slumped below the 50-day moving average and is slowly forming a bearish flag pattern. This pattern is made up of a vertical line and a horizontal channel. It often leads to more downside over time.
Therefore, if this happens, the next key support level to watch will be at $15. However, on the positive side, there is a likelihood that this consolidation is part of the accumulation phase of the Wyckoff Theory, which normally leads to a strong bullish breakout as an asset moves to the markup stage.
Image: Shutterstock
