In a rather radical turn of events, bitcoin shifted its spot price trajectory last week, and has consequently climbed over 20 percent within 14 days. During the past 30 days the leading cryptocurrency has strengthened almost 30% against the U.S. dollar and ascended 107 percent year-to-date.
Praeterea, Michael Saylor's MicroStrategy (MSTR) is up 190 percent in 2023, effectively acting as a leading indicator to bitcoin. BTCUSD is now clearly above MicroStrategy’s realized price, and since the company’s realized price represents the average cost of all their bitcoin purchases, MSTR is now clearly above its bitcoin-related profitability break-even.
MicroStrategy employs Michael Saylor’s dollar-cost averaging (DCA) strategy in its purchases while simultaneously aiming to capitalize on the market’s natural cyclical patterns.
Last year, the company’s bitcoin acquisitions amounted to a modest 8109 units as the market reached its epilogue towards the end of the year. With the economic conditions improving this year, MicroStrategy has once again accelerated its buying program, acquiring a total of 25 745 bitcoin units by October. Therefore, the company’s bitcoin acquisitions have increased by 217 percent by the end of October compared to the previous year.
In addition to these fundamentals, the second largest cryptocurrency by market capitalization, Ethereum, has significantly weakened against bitcoin. This is clearly illustrated by the ETHBTC pair collapsing -28 percent this year. Bitcoin's relative strength is also mirrored by the dominance index climbing 54 percent this year.
Now after gaining technical support from the 200-day and 200-week moving averages, bitcoin has moved into a new price discovery cycle. Between the current spot and the $40K level lies a liquidity gap, which bitcoin now tries to fill. Eventually, the upcoming spot ETF and the April 2024 halving event will uplift bitcoin to $100 000 and beyond.
Written by oinonen_t
