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Buy MSTR stock as BTC forms bullish patterns, whales accumulate

By:
on Oct 31, 2023
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  • MicroStrategy share price has done extremely well in October.
  • Bitcoin price has formed a bullish pennant pattern on the daily chart.
  • The number of Bitcoin whales has continued rising in the past few weeks.

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MicroStrategy (NASDAQ: MSTR) stock price had a successful October even as key indices like the Nasdaq 100 and S&P 500 plunged into a correction. The shares surged to a high of $448 on October 25th, which was almost 50% above the lowest level during the month.

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MicroStrategy as a Bitcoin ETF alternative

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Bitcoin price had a strong performance in October as hopes of a spot Bitcoin ETF rose. Analysts believe that a spot ETF will help take Bitcoin mainstream and create an ideal asset that institutional investors will be comfortable buying. 

It is still unclear whether this situation will happen since investors have always had ways of gaining access to Bitcoin. For example, the Bitcoin Strategy ETF (BITO) has been around for a while. This fund tracks Bitcoin futures and has a close correlation with BTC. It now has over $890 million in assets.

Investors have access to Grayscale Bitcoin Trust (GBTC), the biggest fund in the industry with over $21 billion in assets. The challenge for GBTC is that its fees are quite high while its discount to Net Asset Value (NAV) has been substantial. The discount has narrowed recently after Grayscale won a lawsuit against the SEC.

MicroStrategy has been one of the best ways for companies to invest in Bitcoin indirectly. While the company’s core service is in technology analysis, it is known for its substantial Bitcoin holdings.

The firm holds over 158k Bitcoins, which are now valued at over $5.38 billion, which is still lower than the company’s valuation of over $5.9 billion. This makes MicroStrategy essentially a Bitcoin company.

The benefit of institutions holding MSTR is that it has no expense ratios. BITO has an expense ratio of 0.95% while GBTC has a ratio of 2%. These are hefty fees, which can add up over time.

Bitcoin price bullish pattern

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MSTR stock

BTC chart by TradingView

The other reason to buy MSTR stock is that Bitcoin has formed numerous bullish patterns. As shown above, the BTC price has surged to over $31,780, the highest point on July 13th. This was a notable price since it had struggled moving above this level several times this year.

Bitcoin has also formed a bullish pennant pattern that is shown in black. In price action analysis, this pattern is one of the most bullish signs in the market. This pattern is characterized by a long flag post and a triangle pattern.

Further, Bitcoin price has surged above the 50-day and 200-day Arnaud Legoux Moving Averages (ALMA). Therefore, there is a likelihood that the coin will continue rising as buyers target the 50% Fibonacci Retracement level at $42,500. This price is about 23% above the current level.

Therefore, there is a likelihood that Bitcoin price will continue rising, which will be a positive thing for MicroStrategy shares. More so, the number of Bitcoin whales is rising as holders with over 100k coins jump.

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