This post presents a technical analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin is trading near a significant long-term price line that has been stable for three weeks, creating tension among bulls. Meanwhile, shares of the largest publicly listed BTC holder, Strategy (MSTR), have already fallen beneath this “safety net,” signaling bearish indicators for the cryptocurrency.
This safety net is the 100-week simple moving average (SMA), which represents the average price over about two years and serves as a reliable measure for technical analysts to determine major trend changes and long-term support or failures.
For Bitcoin, the 100-week SMA has remained constant for three weeks, preventing further declines from its peak above $126,000. It serves as a safety net for a declining asset, where a rebound from this average could ignite hopes for a vigorous bullish resurgence.
Conversely, a drop below this level could lead frustrated holders to sell, empowering bears and triggering more significant declines.
This is exactly what occurred with MicroStrategy shares in November, as illustrated in the accompanying chart.
MSTR dropped to $220 in early November, breaching the 100-week SMA line. Since then, it has deepened its losses to $160. The stock is now down more than 60% from its year-to-date high of $457.
This situation is crucial for BTC bulls, as MSTR had previously influenced Bitcoin when it fell below the 50-week SMA, another crucial long-term average.
The main point is that bulls must protect the 100-week SMA, or prices may follow MSTR’s descent into more significant losses. If bulls can maintain prices above this average, it would bolster expectations for a rebound.
