This is a technical analysis post by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoin is trading close to a crucial long-term price line held for three weeks, putting the bulls on edge. However, shares of the largest listed BTC holder, Strategy (MSTR), have already slipped under this “safety net”, flashing bearish signals for the cryptocurrency.
This safety net is the 100-week simple moving average (SMA), the average price over approx. two years and a reliable benchmark for technical analysts across markets to identify major trend shifts and long-term support or breakdowns.
For bitcoin, the 100-week SMA has held steady for three weeks, halting the decline from record highs above $126,000. Think of it as a safety net that catches a falling object in the air. A bounce from the average could raise hopes of a trampoline-like bullish rebound.
But if prices fall, frustrated holders may dump more while bears gain confidence, triggering deeper declines.
That’s exactly what happened to MicroStrategy stock in November, as seen in the chart below.
MSTR fell to $220 in early November and penetrated the 100-week SMA line. Since then, it has expanded sales to $160. The stock is now down over 60% from its year-to-date high of $457.
This is critical for BTC bulls as MSTR also led bitcoin earlier when it broke below the 50-week SMA, another much-watched long-term average.
Most importantly, bulls must defend the 100-week SMA or prices risk following MSTR’s path into deeper losses. If bulls manage to keep prices above average, it will bolster hopes that it acts as a springboard for a bullish rebound.
