Bitcoin (BTC) is trading within a bear flag pattern that projects a breakdown toward the sub-$50,000 area, or roughly 30% below current levels. However, Michael Saylor’s Strategy could spoil the bears’ plans.
BTC/USD three-day price chart. Source: TradingView
Key takeaways:
Bitcoin has avoided a bear flag breakdown for weeks as Strategy keeps buying BTC.
The setup now resembles Bitcoin’s 2018 bottom, when a bearish pattern failed and triggered a reversal.
Can Strategy’s BTC buying offset weak technicals?
Normally, a bear flag remains a bearish continuation pattern because there is not enough demand to overcome the broader downtrend.
In Bitcoin’s case, however, Strategy has been taking supply off the market faster than miners can replace it.
Since March 2, Strategy’s Bitcoin holdings have risen by 46,233 BTC, while miners have produced only about 16,200 BTC over the same period, meaning it has absorbed nearly thrice the new supply.
Strategy’s BTC holdings chart. Source: BitcoinQuant.CO
Much of that demand has come through STRC, Strategy’s variable-rate preferred stock. When STRC held near or above its $100 par value, Strategy kept issuing shares and accumulating BTC.
For instance, last week, Strategy raised $102.6 million through STRC sales to help fund a Bitcoin purchase worth over $330 million. BTC’s price has jumped by over 6.65% ever since.
STRC at-the-market sales analysis. Source: BitcoinQuant.CO
During March 9–13, STRC sales raised about $776 million, enough to buy over 11,000 BTC, while Bitcoin rose more than 7% even as the S&P 500 fell 1.6%. The same period saw BTC’s price rising over 10.5%.
But when STRC slipped below par in mid-March, issuance slowed. Earlier below-par episodes had coincided with 25%–40% BTC pullbacks, including a nearly 40% drop over three weeks after a January pause.
Bitcoin’s long-term holders and whales drove much of the selling.
Bear flag failure could set stage for rally to $110,000
Bitcoin remains inside a bear flag after a sharp decline, but the pattern would begin to fail if price breaks above the upper trendline near the mid-$70,000 area.
That breakout would…
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