Hello everyone, this week's Technical Analysis will be analyzing $MicroStrategy(MSTR.US)$ . With Bitcoin breaking through the $0.1 million mark, crypto concept stocks have collectively risen. As a shadow stock of Bitcoin, MSTR's trend is also very strong. Coupled with the recent bullish news of being selected into the NASDAQ 100 Index, the stock price is expected to see a new breakthrough.

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On December 14th, $NASDAQ 100 Index(.NDX.US)$ announced the results of the annual component stock adjustment, adding $MicroStrategy(MSTR.US)$ to the NASDAQ 100 Index dominated by technology stocks, effective on December 23, and also incorporating it into the Invesco QQQ Trust ETF.

The inclusion of MSTR marks mainstream financial institutions and investors recognizing its founder Michael Saylor's unorthodox approach. Saylor has been known for his disregard for traditional Wall Street rules. His bold move to lead MSTR's transformation once received widespread attention. Since 2020, MSTR has been crazily acquiring Bitcoin. Saylor once said: Buying Bitcoin is the most cost-effective investment, equivalent to acquiring high-growth monopolistic digital companies, with investment returns far exceeding the S&P 500.

And on the eve of joining the NASDAQ, MSTR once again raised funds by issuing shares to acquire $1.5 billion worth ofBitcoin (BTC.CC)In total, 15,350 coins, this is MSTR's sixth consecutive Monday announcing the purchase of Bitcoin. How aggressive is MSTR in buying coins? Just take a look at the chart below, as of December 18, 2024, MSTR holds a total of 439,002 bitcoins, with a total value exceeding 43.6 billion U.S. dollars, accounting for 2.09%. The remaining holdings of the other 9 companies combined are only one-fourth of MSTR's.

In previous courses, we also discussedMSTR's "Bitcoin flywheel"MSTR actually continues to purchase Bitcoin by using the company's excess cash, debt, equity financing, and other means, driving up the company's stock price through the rise in Bitcoin's price, and then continuing to raise more funds at a low cost to buy more Bitcoin.

Saylor shared in an interview the reasons supporting MSTR's ongoing acquisition of Bitcoin. Bitcoin is scarce, its scarcity comes from the way the protocol was set by its founder, Satoshi Nakamoto, with a set limit of only 21 million coins. In other words, Saylor believes that buying Bitcoin is like buying a few acres of land in Manhattan. We can't produce more land, but we can develop more real estate on this land. Purchasing Manhattan real estate in New York over the past 300 years has always been a good deal. Therefore, MSTR can be seen as a network real estate developer.

In addition, Saylor believes that Bitcoin represents the largest common property in the world. Bitcoin is different from other cryptocurrencies, as there is no company or crime behind it, no devaluation and corruption, it will not disappear due to inflation. It is safer and more reliable than gold, real estate, artworks, and any other cryptocurrencies. Therefore, for MSTR, continuing to buy Bitcoin is the best investment choice.

Technical Analysis

Trend Analysis

According to the weekly chart, MSTR has started a new upward trend since September this year, reaching a new high of $543, doubling in price in just two months. In fact, from the US election day to December 18, the stock price has increased by 56.8%. From the weekly trend perspective, the upward momentum is expected to continue.

The daily chart shows that on November 21, MSTR experienced a significant pullback, mainly due to Citron Research posting on the social platform X stating that they are still bullish on Bitcoin's performance but will hedge through a short position in MSTR. After this news was released, it triggered a significant price pullback.

Currently, the stock price is in a consolidation phase between 338-442, forming a preliminary rectangular pattern. However, it has not yet broken through the upper resistance line. If the volume expands in the future and the stock price breaks 442, confirming the appearance of an ascending rectangular pattern, the probability of continuing the uptrend will be higher.

Interpretation of Indicators

• MSTR stock price is currently stable above the EMA12 and EMA50 moving averages, with a bullish arrangement. Specifically, the short-term moving average is above the long-term moving average, EMA12 has crossed above EMA50, indicating an overall uptrend, suggesting relatively strong stock price. The short-term support level can be around the EMA50 average near 322.

• The MACD indicator has shown a bearish crossover, with recent divergence between the MACD line and the stock price trend, implying the existence of a short-term bearish signal, which may further retreat to near the support level.

• RSI dropped below 50 on December 18, indicating current stock price weakness. However, considering it is close to the oversold zone, it implies potential rebound opportunities may emerge.

Overall, the long-term trend of MSTR remains bullish, but some key indicators release warning signals, indicating a greater short-term breakthrough difficulty, requiring appropriate attention to risks, with a focus on the $322 support level. Of course, the core factor affecting MSTR's stock price is its Bitcoin flywheel strategy, with the rise and fall of Bitcoin determining MSTR's future trend. If Bitcoin continues its strength, we can focus on the rectangular pattern on the daily chart, with a breakthrough likely to continue the upward trend, otherwise, a possible trend reversal downwards. For long-term investors, if they firmly believe in Bitcoin, they can often ignore short-term fluctuations, hold positions steadily in their hands, and wait for a new uptrend.

This content discusses technical analysis, while other methods, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results. All investments involve risks, including potential loss of principal, and there is no guarantee that any investment strategy will be successful.