MicroStrategy Has a Strong Setup as Bitcoin Acceptance Grows
Bitcoin acceptance continues to grow. It hit the balance sheets of corporate companies before it achieved ETF status and it will only be a matter of time before options and leverage become commonplace.
Bitcoin may become a staple on corporate balance sheets, a standard allocation of a diversified growth portfolio or even the core driver of the next S&P 500 sector, cryptocurrency.
I’ll admit that when I first learned about bitcoin, I dismissed it as gimmicky. Of course, at that time, we only heard about it being used for nefarious reasons, like in the Silk Road, a black market. While I’ve witnessed broader usage for bitcoin and intriguing business development around blockchain technology, I still don’t have direct holdings in bitcoin.
That said, I will trade bitcoin and associated names with a strong technical setup, like the weekly and monthly pattern on MicroStrategy (MSTR) .
Monthly charts aren’t my norm, but they can’t be simply ignored because the timeframe requires more time and patience.
Since its huge run in the first quarter, MSTR has been trading in a wide channel. A trading channel as wide as $100 to $170 is not for the faint of heart. This trade falls into the high-risk category; however, MSTR sits at the top end of that channel.
The monthly price has been following the five-month exponential moving average (EMA) rather closely, although not exactly, but it provides a guide. If the stock closes below that level, traders should keep a closer eye on the position and consider a stop under the 10-month EMA. As long as these two are trending higher together, it is difficult to be bearish MSTR.
It is important to note that MSTR is strongly correlated to the Nasdaq and technology despite being a de facto bitcoin position. If technology falters, expect MSTR to follow suit.
At the time of publication, Byrne had no positions in any securities mentioned.