Is Bitcoin at Risk? MSTR's Repetitive Patterns Hark Back to the Pre-2022 Downfall

Recent analyses indicate that MicroStrategy (MSTR) is experiencing a bearish fractal pattern that mirrors its downtrend from 2021 to 2022. Insider selling is raising alarms and historically correlates with declines in Bitcoin (BTC) value. As MSTR, a major corporate holder of Bitcoin, currently has a significant portion of its treasury amounting to approximately $56.23 billion in BTC, its future movements could heavily influence Bitcoin's trajectory. The company’s recent acquisition of more Bitcoin and the drop of MSTR’s token into bearish territory suggest potential turbulence ahead for Bitcoin investors.

Key Takeaways

MSTR exhibits a bearish fractal pattern reminiscent of its previous decline around 2021-2022, while insider selling indicates potential vulnerabilities that have historically pointed to BTC downturns.
Large withdrawals in December could signal substantial losses, indicating a deeper decline if the selling pressure persists.
MicroStrategy holds approximately $56.23 billion in Bitcoin, making its actions pivotal in determining Bitcoin’s next direction.
MSTR recently added 9,062 BTC to its holdings, but the value of its stock has fallen, raising concerns for Bitcoin investors.

Bitcoin under threat? MSTR’s repeating pattern echoes pre-2022 meltdown

Insider Sell-Off and Emerging Fractal Patterns

MicroStrategy (MSTR) is showing a fractal pattern, reflecting its historic bearish trends that spanned approximately a year from 2021 to 2022. This pattern is increasingly evident as insiders, including executives, begin to divest their MSTR equity in lucrative transactions, already amounting to millions.

MSTR vs Bitcoin chart.

The previous fractal indicates that MSTR traded downwards for 689 days. Thus far, the current equivalent downtrend has spanned around 364 days as evidenced by chart analysis. When aligned with Bitcoin’s daily chart, there's a notable correlation suggesting that Bitcoin might be poised for additional downside movement.

MSTR vs Bitcoin chart.

According to this analysis, Bitcoin could potentially enter a stubborn bearish phase lasting approximately 325 days, hinting at a possible low around October 2026. Interestingly, MSTR’s Net Asset Value (NAV) stands at 0.95, indicating trading at a slight discount compared to its Bitcoin assets.

Bitcoin's December Performance

A recent assessment by Alphactal reports that Bitcoin has retreated by 33% from its all-time high.

Bitcoin drawdown from ATH

Historically, such pullbacks have led to harsh Decembers, in which the cryptocurrency experiences significant value losses. Experts warn that current market conditions display clear signs of structural weakness, foreshadowing increased volatility, both upward and downward.

With the pressure from selling dominating the market, a notable drop in December remains a real possibility. An analysis of Bitcoin's performance in December over the past five years indicates mixed results. Notably, December 2021 marked a steep decline that carried through to the next year and catalyzed a larger bearish cycle.

Bitcoin price chart.

In contrast, other years have seen Bitcoin either maintain upward momentum or set the stage for substantial rallies, leading to significant gains. At this time, there is no definitive indicator as to what December will hold based merely on past trends, but current cycles suggest 2025 could echo today's market challenges.

Broader Market Under Pressure

The entire crypto market is grappling with bearish trends, as liquidity has sharply decreased. Since the market high in October, about $1.54 trillion has been lost in total crypto market capitalization, illustrating the depth of the current downturn. Bitcoin alone has seen an outflow of roughly $800 billion, as investors pull back from both Bitcoin and altcoins.

As market sentiment remains low, Bitcoin is likely to continue facing pressure, and further declines could occur unless investor confidence is restored.