This is a daily analysis by CoinDesk analyst and chartered market technician, Omkar Godbole.
Strategy (MSTR) Bears Have Pierced Key Bull Market Support, Leaving Bitcoin the bears follow them.
The technical breakdown focuses on Strategy’s stock price’s recent breakout from its 50-week simple moving average (SMA). This SMA had consistently acted as a springboard since March 2023, marking the end of corrective pullbacks and sparking buying interest that propelled the stock to new highs for over two years.
But, in recent weeks, the bears have managed to establish themselves below this crucial average, signaling a significant weakening in buying pressure and exposing the stock to further declines.
Bitcoin bears, on the other hand, have yet to achieve this. BTC’s own 50-week SMA has served as a reliable stepping stone for the past two years, and prices are still holding above that level despite pulling back from all-time highs above $124,000.
In essence, BTC’s broader bullish trajectory remains intact.
However, Strategy’s recent technical deterioration deserves attention as it is the largest publicly traded BTC holder in the world, with a coin reserve of 640,250 BTC ($71.73 billion), according to Bitcointreasuries.net.
Its sustained BTC accumulation has been a key driver of the rally from $30,000 to $124,000 over the past two and a half years, making its current price weakness a potential warning sign for BTC bulls.
Both Strategy and bitcoin simultaneously surpassed their respective 50-week SMAs in the first quarter of 2023, embarking on impressive rallies, with the moving average serving as a reliable floor (marked by boxes) during corrections.
The bottom has now given way to the bearish strategy, with popular momentum indicators like the weekly MACD histogram flashing red. Bitcoin’s MACD is also in the red; It remains to be seen if its price will follow suit and fall below the 50-week SMA.
At the time of writing, BTC changed hands near $111,700, with SMA support at $101,872, according to data source TradingView.
Read: Bitcoin May Plunge to $100,000 as Friday’s BTC Drop Reinforced 2017-21 Trendline Resistance