BMNR stock: Top 3 reasons why Tom Lee’s BitMine is about to soar

BitMine stock continued its strong comeback this week as Ethereum price soared to its highest level in months and as it neared the end of its accumulation. BMNR jumped to $24.15, up by 90% from its lowest level this year. This article explains the top reasons why the stock may be about to soar.

End of dilution ushers a period of free cash flow

One of the top reasons why the stock may be about to soar is that its era of cash burn is about to end. In a statement on Monday, the company said that it now holds over 5.8 million ETH tokens, meaning that it needs to buy less than 150k coins.

The company’s “alchemy of 5%” give it a goal of buying 6 million coins. After that, the company will move from being a highly dilutive name into a free cash flow machine. That’s because it will now start generating a lot of revenue from its staking operations.

A good example of this is Sharplink, the second-biggest ETH holder in the industry. It ended the last quarter with 888,938 coins, helping it generate 24,755 coins in staking rewards. This staking gave it revenue of $11.5 million. 

Assuming that the same happened with BitMine and its 6 million coins, its staking revenue would be over $74 million. The annual revenue, all factors constant, would be $296 million a year. This figure would be much higher than this if Ethereum continues rising. 

Most importantly, the company has just a handful of employees, meaning that most of its revenues will go to shareholder distributions. 

Ethereum’s fundamentals and technicals are improving

The other bullish catalyst for the BMNR stock price is that its fundamentals are improving. For example, ETH ETF inflows have started to bounce back this month. They have added over $1 billion in inflows this month, a sign that investors are buying the dip. 

The ongoing ETH ETF inflows is happening at a time when staking inflows are gaining momentum. The staking ratio has jumped to 35% and the trend is accelerating. All these explains why the amount of ETH tokens in exchanges is dropping and is hovering at the lowest level in years.

On top of this, the total value locked (TVL) in its decentralized finance (DeFi) platform has continued rising. ETH has also just formed a golden cross pattern, which happens when the 50 and 200-day moving averages cross each other.

BMNR stock has strong technicals

BitMine stock chart | Source: TradingView

The daily chart shows that BitMine stock has rebounded in the past few days and is now hovering at its highest level in months. It has jumped above the 50-day Exponential Moving Average (EMA). The Average Directional Index (ADX) jumped to 31, its highest level since February 26. It also moved above the key resistance level of $22.

Therefore, these technicals suggest that the stock has more upside to go. If this happens, the next key level to watch will be at $35.