While mainstream cryptocurrencies have surged recently, with the global digital asset market cap hitting an all-time high of $4.2 trillion last month, blockchain-focused companies have not fully shared in the industry’s gains. Take leading Bitcoin miner Marathon Digital (NASDAQ: MARA) as an example: its year-to-date stock gain remains below 1%, significantly underperforming the Dow Jones Index’s over 8% rise during the same period.
However, over the past five trading sessions, Marathon Digital’s stock price has climbed nearly 10%. This rebound is closely tied to improvements in the company’s fundamentals. Its Q2 earnings report, released in late July, showed a 64% year-over-year revenue increase to $238.5 million, alongside a net profit of $808.2 million, bolstered by stronger Bitcoin prices. These results underscore how crypto market booms can significantly amplify miners’ earnings.
Analysts caution, though, that miner profitability remains heavily dependent on Bitcoin’s price volatility. A sharp correction in the cryptocurrency market could expose related stocks to substantial risks. Investors are advised to remain wary of high volatility and rationally assess holding risks.
Latest trading data shows that short interest in MARA accounts for 35.6% of its float, far exceeding the 10% risk threshold identified by Charles Schwab. Such a high short interest reflects market pessimism but also sets the stage for a potential short squeeze. An unexpected rise in the stock price could force short sellers to cover their positions, triggering concentrated buying that further drives up the share price in a feedback loop.
Since January 2021, MARA’s stock price and short interest have shown a significant negative correlation (coefficient: -0.7149). During this period, the stock fell 38% while short interest surged 115%, with this divergence recently reaching an extreme. The current 36% short interest indicates highly concentrated bearish bets—any better-than-expected fundamental improvements or industry tailwinds could trigger a short squeeze.
For context, real estate tech stock Opendoor (OPEN) has already become a battleground for bulls and bears with a short interest of 26.6%. MARA’s short interest is even higher, and the cryptocurrency mining sector where it operates features stronger industry barriers and growth certainty.
Quantitative analysis suggests that after 4 up weeks and 6 down weeks over the past 10 weeks, MARA’s technical indicators point to a potential 11% rebound over the next six weeks, with a target price of $19. The options market shows aggressive positioning: investors are constructing $18/$19 call spreads, risking $35 for a potential $65 gain (186% return). Some traders are even betting on the stock hitting $20, using $18.50/$20 call spreads to target returns as high as 275%.
These options trades are concentrated on the October 31 expiry, indicating strong market expectations for a major shift by the end of Q3.
