Bitcoin miner Marathon Digital (MARA) is sputtering after a frenzy that’s led to eye-popping returns over the last few weeks. But the window to lock in gains for MARA stock is starting to close.

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MARA stock crumbled 9.5% in the stock market today. Volume was heavy. The action breaks an 11-day win streak for Marathon Digital shares.

MARA stock was on a hot streak that began earlier this month, with shares trading more than 136% above their 50-day moving average by Wednesday’s close.

That indicated the stock’s impressive run was due to end soon, as reported by IBD. Our analysis of the historical price action for MARA stock showed shares typically pull back once they are more than 50% above that 50-day moving average.

That makes a pullback here well overdue for a stock that at one point was up roughly 160% for the month alone.

This action marked a key sell signal for traders, since locking in partial profits into strength is always prudent position management.

For those with hefty profits and a bullish outlook, entire positions don’t necessarily need to be sold. But sell signals should still be heeded.

After locking in partial profits into strength, traders can use Thursday’s downside reversal as another signal to trim their positions. Seeing a close below the prior day’s bar is another way to lock in gains at elevated levels.

A close below the 10-day moving average is another level that technical traders can use for their exit strategy. This is especially helpful for those who are trying to hold for a huge move.

But keep in mind that shares are still 18% above their 10-day line. Traders would need to be willing to sit through a sizable pullback before that sell signal even gets triggered.

MARA Stock Fueled By ETF Speculation

Investors have been fueling MARA stock and other crypto-related trades at a time when many on Wall Street are speculating the imminent regulatory approval of ETFs that track the spot price of bitcoin.

That approval is expected to bring a wave of institutional investors into the crypto market as they in turn offer their customers exposure to securities tied to digital currencies.

The surge comes as investors look toward prospects for bitcoin in 2024, anticipated to bring several catalysts to the cryptocurrency market. One such catalyst is a supply shock via the decrease in rewards for bitcoin miners called “the Halvening.”

This event will see the reward for bitcoin miners cut in half. It’s a measure built into bitcoin meant to cut down on inflation. The Halvening also helps incentivize the bitcoin network to focus on transaction fees rather than mining.

Crypto bulls say the Halvening is set to make supply scarcer at a time when demand from institutions is set to increase.

MARA stock derives its revenue from calculating proof-of-work for transactions that are validated and added to the blockchain.

Follow Mike Juang on X at @mikejuangnews and on Threads at @namedvillage

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