BitMine stock: Tom Lee’s Ethereum bet backfires as key metrics plunge

BitMine stock price has crashed this year as Tom Lee’s Ethereum bet backfires. BMNR dropped to $15.70 on Wednesday, down substantially from last year’s high of $160. This retreat may continue as Cathie Wood pares back her holdings and as the Ethereum price remains under pressure.

BitMine stock has slipped amid soaring unrealized losses

Tom Lee’s BitMine stock has plunged by 53% this year, lagging behind the broader market as top indices like the Nasdaq 100 and S&P 500 have soared to their record highs.

The retreat happened as Ethereum, its main asset, retreated by 15% this year amid the broader crypto market weakness. Also, it happened as the company continued issuing new shares to buy these coins.

BitMine has bought over 342k Ethereum coins in the last 30 days, bringing its total amount to 5.62 million. This means that the company will likely cross the crucial 6 million milestone in July or early August.

BitMine’s unrealized losses have continued rising this year. In its recent statement, the company said that it had suffered a loss of close to $10 billion as Ethereum slumped from last year’s high of $4,950 to $1,735 today. This explains why Cathie Wood, one of its earliest backers, has started selling shares at a loss.

Ethereum’s technicals and fundamentals have worsened

BitMine believes that Ethereum is one of the best assets in the crypto industry because of its large market share in key areas like stablecoins, decentralized finance, and real-world asset tokenization. 

Its long track record of stability and decentralization has made it the chain of choice among developers and companies launching new projects on-chain.

However, third-party data shows that its business is deteriorating this year. The most important metric is that its network has generated just $87 million in fees this year, down from $9.9 billion in 2021. Ethereum is now being beaten by top players like Tron and Hyperliquid in this metric.

More data shows that Ethereum is losing momentum. For example, the total value locked (TVL) in its decentralized finance (DeFi) ecosystem has tumbled from over $90 billion last year to $37 billion today. Aave, its biggest protocol, came on the verge of collapsing after the recent KelpDAO hack.

Ethereum has also lost momentum among users. Its active addresses dropped to 435k from a record high of 6.12 million in 2021.

Ethereum active addresses have slumped | Source: DeFi Llama

Technicals also show that Ethereum is at risk of further weakness. On the weekly chart, it has slumped below the 50-week moving average. It has also slumped below the key support of $1,733, its lowest level in February. It is also attempting to drop below the 78.2% retracement level.

ETH price chart | Source: TradingView

Therefore, the path of the least resistance for ETH is bearish, with the next key target to watch being at $1,500. Such a drop will reduce the value of BitMine’s assets from the current $9.7 billion to $8.4 billion.

BMNR stock price analysis

BMNR stock chart | Source: TradingView

The daily chart shows that Ethereum price has made a bearish breakout in the past few days. It moved below the key support of $17.55, the lower side of the horizontal channel that formed between February and June.

The stock has also retested the lower side of the range. It also remains below the 50-day moving average. Therefore, there is a risk that it will continue falling in the near term, potentially to the key support levels of $15, followed by $10.