The recent breakout in the MSTR stock could provide a major catalyst for Bitcoin to surge to $70,000 levels.
The world’s largest corporate Bitcoin BTC $68 799 24h volatility: 4.3% Market cap: $1.38 T Vol. 24h: $44.63 B holder, MicroStrategy, saw its stock price surging more than 6% on Monday, thereby hitting a six-month high above $190 levels. In its reports, 10x Research stated that the MSTR share price is on the cusp of a six-month breakout.
This could be positive for the Bitcoin price which has continued to trade under pressure since the beginning of October. At press time, BTC price is trading 2% down slipping under $62,500 levels with bears taking charge before the US CPI data release on Thursday.
10x Research noted that the breakout in the Microstrategy stock price would be bullish for Bitcoin pushing it higher for the rest of October. Markus Thielen, founder of 10x Research, said that the MSTR stock surging past $180 could lead to additional bullish momentum. However, he said that the stock price is already 44% more expensive in comparison to BTC.
“Market makers may be forced to hedge their short gamma exposure as they likely sold calls to retail investors), and hedge funds holding $4.6 billion in short positions on MicroStrategy shares could face pressure to cover those shorts if the price surpasses the $180 mark,” Thielen wrote.
The MSTR stock rally could prompt MicroStrategy to take on additional debt to acquire more Bitcoin, as demand for the company’s notes has remained strong, with each issuance being consistently upsized, Thielen stated in the report.
“Raising even more debt to purchase bitcoin seems logical. A breakout in MicroStrategy’s stock could have a ‘tail wags the dog’ effect, where the momentum in its shares positively impacts Bitcoin’s price, creating a feedback loop,” noted Thielen.
Bitcoin Price Faces Rejection at $64,000
The bitcoin price has faced rejection once again at $64,000 this week and has been heading lower back to its support levels of $60,000. Socio-political events appear to be the key factor limiting Bitcoin’s upside, despite the global monetary base (M2) expanding from $104 trillion in June to $108 trillion in October. Bitcoin has faced multiple rejections at the $68,000 resistance level, indicating that the recent rally to $64,000 is unlikely driven by the U.S. fiscal situation.
There have been multiple factors that have been playing the spoiled sport for Bitcoin. For example, the escalating war in the Middle East, the uncertainty in global macros, and the upcoming US presidential elections next month in November.
Last week, the data released for US jobs data reduced the odds of an economic recession. However, it has also reduced the probability of another 50 bps rate cut in November. Thus, the higher interest rates will keep investors risk averse with less capital inflows into crypto.
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