Bitcoin mining stocks are under intense pressure as the BTC coin crashed below $60,000 on Tuesday night. It continued falling and has moved to $59,800 on Wednesday. As a result, Marathon Digital (MARA) stock crashed by over 10.9%, bringing the year-to-date drop to about 32%.
Bitcoin price forms a bearish engulfing
Riot Platforms (RIOT) stock price also crashed by almost 9% to $10.11. It has also fallen by over 30% this year, giving it a market cap of $2.8 billion. Other Bitcoin mining companies like Argo Blockchain, Bitfarms, and CleanSpark also tumbled.
There is a likelihood that these stocks will continue falling in the coming months since Bitcoin has formed a highly dangerous candlestick pattern. As shown below, the coin has formed a bearish engulfing candlestick on the monthly chart.
This pattern is usually characterized by a bearish candlestick covering a bullish one. The chart shows that April’s bearish candle has almost covered the March candlestick, meaning that a bearish trend may be about to happen.
At the same time, the chart also shows that the coin has been forming a cup and handle pattern. In price action analysis, this is one of the most popular continuation signs in the financial market.
This means that, in the long term, Bitcoin will resume the bull run and possibly hit $100,000. However, in the near term, the coin will continue forming the handle section, which is characterized by either a deep pullback or a consolidation.
Marathon Digital and Riot Platforms earnings
Fundamentally, these companies are facing some major challenges now that halving has been activated, leading to a sharp increase in mining difficulty. The impact is that the companies will generate fewer coins in the foreseeable future.
Looking ahead, the next important catalyst for the MARA and RIOT stock prices will be the upcoming earnings. Marathon Digital will go first and release its financial results on Wednesday.
Analysts expect these numbers to show that its revenue increased by 253% to $180 million. They also see revenues dipping to $149 million in the second quarter. For the year, estimates are that the company will make $746 million and $1.02 billion, respectively.
Riot Platforms will next deliver its financial results on May 9th. Like Marathon, analysts believe that the company’s revenue will be $94.6 million followed by $100 million in the next quarter.
These results will be important since the companies will provide more color about their production after the halving event. As a reminder, halving is a process that reduces the Bitcoin rewards by half, making it more difficult to produce new coins.
At the same time, these companies are seeing weaker demand from ETF providers as the funds have continued seeing outflows in April. As such, there is a likelihood that the MARA and RIOT stocks will continue falling in the near term.
