After weeks of significant downward pressure, MicroStrategy shares, which have fallen over 12%, are trying to find a bottom. The price of Bitcoin, which was rapidly declining, rebounded to around $79,000 at one point yesterday, alleviating concerns about the company's average purchase price that dominated market sentiment at the end of January.
For a time, investors were concerned that if the price of Bitcoin fell further, MicroStrategy (MSTR) would incur valuation losses. Currently, with short-term risks dissipating, attention is focused on whether a price rebound will occur. Looking at correlation data, fund flows, and price structures, this stock has entered a very high-risk zone, and the next major movement in Bitcoin could determine direction for several weeks.
Bitcoin linked... reasons why MicroStrategy fell more significantly.
Since early October last year, MicroStrategy's stock has fallen by about 62%, while Bitcoin has dropped by about 38% during the same period. This difference shows that MSTR appears to be leveraged to Bitcoin. When Bitcoin shows weakness, MicroStrategy tends to fall more significantly as investors reflect financial exposure, debt, and sentiment more.
Dune data shows the same trend. The 90-day moving correlation coefficient between MSTR and Bitcoin is about 0.97 (close to 1), indicating that the two assets moved in the same direction almost daily.
However, this high correlation does not imply a larger drop. Correlation only measures direction and does not reflect volatility. In other words, MSTR follows Bitcoin's flow, but the volatility is amplified due to leverage and structural risks.
This structural phenomenon became evident at the end of January when Bitcoin briefly fell below MicroStrategy's average purchase price of about $76,000. Concerns over evaluation losses affected the market and added pressure to the stock. As Bitcoin recovered to $78,000, these concerns eased, and investor sentiment calmed.
The correlation remains very high. If Bitcoin's price weakens again, there is a high likelihood that MSTR's stock price will also fall, leaving downside risks.
Capital flow and trading volume signals are mixed.
Capital flow data shows a more complex situation. The Chaikin Money Flow (CMF), which measures capital inflows or outflows using price and volume, has been showing an upward trend since mid-January. While MSTR's stock price showed a decline from January 14 to February 2, the CMF continuously rose. Such bullish divergence suggests that large investors have quietly accumulated during the bearish phase.
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The CMF is currently close to the boundary line of inflows and outflows, which is at 0. A stable breakout above the 0 line signals that buying pressure is stronger than selling pressure. The last time it clearly crossed this line was at the beginning of September, after which the stock price rose by about 25%. Therefore, the CMF is considered a key catalyst for attempts at rebounds.
However, the trading volume of MicroStrategy shares shows a different trend. The On-Balance Volume (OBV), which indicates whether volume supports the flow, is showing a downward trend. In the recent decline, the OBV has worsened alongside the stock price and has broken below the upward trend line. This signals a decrease in the number of participants and a weakening interest from individual investors.
When combining these indicators, the signals are mixed. The CMF shows selective accumulation by large investors, but the OBV indicates that overall market participation remains weak due to the recent decline in buying prices.
When these indicators point in different directions, it becomes difficult for a bull market to gain momentum. Without strong participation, upward movements quickly fade away. Therefore, even if institutions position themselves in advance, Bitcoin's bullishness is essential for sustained upward movement.
If the $139 level breaks, there is a possibility of a 20% decline.
The indicators are sending conflicting signals, making the MSTR price range more crucial than ever. The most important support level is around $139. This range has withstood several tests and aligns with the Fibonacci support level after the October decline. This is a key decision area for the market.
If the closing price falls below $139, the downside risk will increase significantly. In this case, the price could drop to $107, which means an additional decline of about 20%. This movement is likely to occur simultaneously with Bitcoin's bearish reversal. A deeper downtrend could also come with an intensification of Bitcoin's weakness.
The first major resistance level on the upside is near $170. This is about 20% higher than the current range. This level has pressed down on every bounce attempt and remains a key resistance level. If it breaks above $170, it will signal an improvement in the technical structure and a recovery in investor confidence. The next resistance above that is around $190.
Breaking through this range can confirm that a bull market has decisively turned and that capital inflow leads to price strength.
Currently, MicroStrategy is hovering around $139. The downside risk is at $107, and the resistance level is around $170. This wide range is nearly 20% on either side, creating a decision area that is open on both sides. The direction in which either side breaks first is expected to be determined by Bitcoin's movements. If Bitcoin rises above $80,000, MSTR may challenge the $170 breakout. If the consolidation continues, the adjustment period could be extended. If Bitcoin falls, the $139 support level may come under threat.
Volatility is expected to remain high until a clear breakout occurs. All upward movements carry the risk of a pullback.