Is the exponential rally in Marathon Digital Holdings’ share price sustainable?

Bitcoin miner Marathon Digital Holdings’ pick-and-shovel strategy leads to huge gains in its share price

Marathon Digital Holdings' recent success and over 160% rally in its share price since the beginning of the month can be attributed to its strategic focus on mining operations and providing essential infrastructure for cryptocurrency transactions.

Some argue that the company’s ‘pick-and-shovel’ strategy offers a potentially more stable and sustainable avenue for investors compared to the unpredictable nature of individual cryptocurrencies like Bitcoin.

By emphasising mining, Marathon Digital positions itself as a critical player in the crypto market. This approach has garnered the attention of seasoned investors and industry analysts, as the company's stock has outperformed even Bitcoin during an impressive winning streak over the past few weeks.

The company's success raises questions about the long-term sustainability of different investment approaches in the crypto market. It also prompts a broader examination of the cryptocurrency landscape, as investors actively seek opportunities that offer stability and resilience in an era of heightened market volatility.

Marathon Digital's focus on mining operations provides investors with an alternative pathway into the industry that is not subject to the extreme fluctuations associated with individual digital assets. This has made the company an attractive option for those who seek stability and resilience in the volatile crypto market.

Technical outlook on the Marathon Digital Holdings share price

Having said that, the Marathon Digital Holdings’ share price has been extremely volatile in itself, falling by over 96% from its November 2021 $83.45 high to its December 2022 low at $3.11 before rising to its current December high at $31.30.

Marathon Digital Holdings Weekly Chart

The sharp rally in the Marathon Digital’s share price to levels last traded in March 2022 is beginning to show signs of losing upward momentum which could, in turn, lead to another reversal as has been the case following the sharp rally in July/August 2022 and that in the first half of this year.

Marathon Digital Holdings Daily Chart

A price gap with Tuesday’s high at $27.05 may well get filled within the next few days. Even if a deeper reversal than that were to be seen over the coming weeks, the Marathon Digital Holdings share price has clearly formed a saucer bottom, now that it has risen above its $19.88 July peak.

Potential, longer-term upside targets are the March 2022 peak at $32.74, a rise above which would put the February 2021 high at $49.41 and the minor psychological $50 mark on the map.