Bitcoin Fluctuates as MicroStrategy Stock Reaches 6-Month Peak

TLDR

• Bitcoin briefly touched $64,400 before falling to $62,800 amid stock market turbulence
• Over $215 million in leveraged crypto positions were liquidated
• MicroStrategy (MSTR) stock surged 5.5% to a 6-month high
• A U.S. judge approved FTX’s bankruptcy plan, potentially allowing creditor repayments
• Bitcoin’s rise coincided with increasing odds of a Donald Trump election victory

The cryptocurrency market experienced a rollercoaster day on Monday, with Bitcoin (BTC) briefly touching $64,400 before retreating to $62,800 within an hour.

This sudden volatility coincided with a sharp downturn in the U.S. stock market, as the S&P 500 and Nasdaq both fell over 1% during the afternoon session.

The abrupt price movements led to significant liquidations in the crypto derivatives market. Over $215 million worth of leveraged positions were wiped out, affecting both long and short traders almost equally.

According to data from CoinGlass, approximately $110 million of liquidations were long positions betting on higher prices, while $105 million were shorts anticipating price weakness.

Despite the turbulence, Bitcoin managed to recover some of its losses, trading at $63,300 by the end of the day, representing a 0.7% increase over the past 24 hours.

The broader cryptocurrency market, as measured by the CoinDesk 20 Index, showed a modest gain of 0.3% during the same period.

While Bitcoin struggled to maintain its earlier gains, some altcoins demonstrated relative strength. Tokens such as Near Protocol (NEAR), Uniswap (UNI), and Aptos (APT) posted gains ranging from 5% to 8%.

However, Ether (ETH), the second-largest cryptocurrency by market capitalization, underperformed with minor losses.

A notable development that may have helped cryptocurrencies recover faster than the stock market was the approval of FTX’s bankruptcy plan by a U.S. judge.

This decision paves the way for the repayment of creditors of the collapsed crypto exchange, potentially injecting some optimism into the market.

In technical analysis, Bitcoin briefly reclaimed its 200-day moving average, which currently sits at $63,575 according to TradingView data.

However, the cryptocurrency failed to hold above this key level, which would have reaffirmed its uptrend since the lows of around $52,000 hit in early September.

Interestingly, Bitcoin’s recent price movements have coincided with changing political forecasts. ETC Group, a digital asset investment product issuer, noted that Bitcoin’s rise over the past few days aligned with increasing odds of Donald Trump winning the U.S. presidential election in November.

Data from the blockchain-based prediction marketplace Polymarket showed Trump’s chances of victory rising from 50% on Friday to 53.5% by Monday.

Perhaps the most striking outlier in Monday’s market was MicroStrategy (MSTR), the largest public corporate owner of Bitcoin.

Despite the weak stock market, MSTR shares surged to $190, reaching a six-month high and closing the day 5.5% higher. The company currently holds nearly $16 billion worth of Bitcoin.

Markus Thielen, founder of 10x Research, suggested in a report that a breakout above the $180 price level for MSTR could lead to further strength, even though his analysis showed the stock was already 44% overvalued compared to Bitcoin.

Thielen noted that market makers might be forced to hedge their positions, and hedge funds holding $4.6 billion in short positions on MicroStrategy shares could face pressure to cover if the price continues to rise.

The rally in MicroStrategy’s stock could potentially lead to the company raising even more debt to acquire additional Bitcoin, as demand for the company’s notes has been consistently strong. T

hielen wrote, “Raising even more debt to purchase Bitcoin seems logical,” adding that a breakout in MicroStrategy’s stock could create a positive feedback loop with Bitcoin’s price.