Morning Commentary: Marathon Digital convertibles under pressure as Bitcoin sinks

By Abigail W. Adams

Portland, Me., Jan. 21 – It was another turbulent day in the convertibles secondary space as selling pressure in high-flying tech stocks continued.

Disappointing earnings added to investor woes on Friday with Netflix Inc. crashing more than 20% on the heels of its fourth-quarter earnings report.

However, while benchmarks launched the day firmly in negative territory, dip-buying and short-covering lifted markets from their lows with some indexes turning positive.

The Dow Jones industrial average was up 89 points, or 0.26%, the S&P 500 index was down 0.01%, the Nasdaq Composite was down 0.3% and the Russell 2000 index was up 0.73% shortly before 11 a.m. ET.

While the secondary space was active early Friday with $97 million in reported volume, few names saw concentrated trading activity.

However, names with exposure to Bitcoin saw added pressure as the cryptocurrency sank below the $40,000 resistance level.

Bitcoin miner Marathon Digital Holdings, Inc.’s 1% convertible notes due 2026 sank further into distressed territory as stock cratered.

The 1% convertible notes traded down 3 points outright with stock off almost 5%.

The notes were changing hands at 68.5 versus a stock price of $23.20.

There was $11 million in reported volume.

Marathon Digital’s stock was changing hands at $23.55, a decrease of 5.20%, shortly before 11 a.m. ET.

Bitcoin was trading at $38,759.90, a decrease of 4.68%.

The cryptocurrency, which had been under pressure as investors flee risk assets, fell further after Russia proposed a ban on the cryptocurrency.

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