MicroStrategy’s $11.4B Bitcoin purchase to spark $100K price rally in December?

Bitcoin price analysis: 

Bitcoin price opened at $92,834 on Tuesday Nov 26, down 7% from the global peak of $99,314 recorded on Friday. Cascading liquidations after MicroStrategy CEO, Michael Saylor announced the firm’s latest $5.4 billion BTC purchase, triggered downward volatility.

With technical indicators flashing rebound signals, will Bitcoin’s break the $100,000 on the next major breakout phase?

Michael Saylor’s latest announcement takes MicroStrategy’s November inflows to $11.4B

Bitcoin price wobbled 7% on November 25, under intense sell-side pressure from traders booking profits, and diversifying towards the altcoin markets. Amid the market volatility, MicroStrategy CEO, Michael Saylor announced the firm had acquired another 55,500 BTC at an average of $97,862.

This transaction stands out for a number of reasons. First, this sets a new record for the firm’s largest single-day inflow. It also means that MicroStrategy has now announced bitcoin purchases in 3 consecutive Mondays since Donald Trump‘s re-election on November 5.

Also, having acquired of $2.03 billion, and $4 billion on Nov 11 and Nov 18 respectively, the $5.4 billion purchase announced on Monday brings MicroStrategy’s November buying spree to $11.43 billion.

How will MicroStrategy’s $11.4B November buying spree impact Bitcoin Market?

Short-term bearish impact: 

Publicly-disclosed buys from sophisticated long-term investors like MicroStrategy often triggers a temporary price downturn.

First, retail buyers often react by rapidly moving their bids closer to the quoted purchase price, believing it to reflect institutional valuation.

Bitcoin price had traded as high as $98,800 on Monday. But after Michael Saylor’s announced the purchase price of $97,862, short-term trader’s early reaction saw BTC fall as low as $92,240 within hours.

As speculative traders recalibrated positions, this triggered sharp short-term LONG liquidations in the derivatives markets, causing a rapid price downswings.

In confirmation of this narrative, over $155 million BTC futures contacts were liquidated in the last 24 hours. According to CoinGlass data, bulls took 80% of the losses, with $126.58 million LONG positions closed.

These cascading liquidations accelerated the downward volatility after MicroStrategy’s announcement, leading to a 7% dip from $98,800 to $92,400 within 24 hours.

Bullish impact long-term:

Evidently, the “sell-the-news” frenzy, and cascading LONG liquidation  triggered by MicroStrategy’s announcement contributed to Bitcoin 7% price dip on Monday.

However, long-term implications could be bullish. MicroStrategy is long-term investors that has been acquiring Bitcoin since 2020. Hence, by pulling 134,480 BTC in November alone, the firm has reduced circulating supply considerably.

By removing surge large volumes of BTC from the market supply, MicroStrategy inadvertently clears the path for Bitcoin to build stronger upward momentum during the next market demand surge.

More so, MicroStrategy’s $11.4 billion buying spree after Trump’s win affirms growing confidence that the incoming administration will take a friendlier regulatory stance on crypto, potentially accelerate corporate adoption.

This further reinforces institutional confidence in Bitcoin, which often encourages retail buying, in the long-run.

Bitcoin price forecast: $100K rally still in play

After the initial 7% price dip, Bitcoin price is shows signs of a major rebound ahead. First, bulls are holding firm above the $93,000 level, a critical support zone that has mitigated further downside after a 7% retracement observed over the past four days.

The sustained $93,000 support is significantly higher than the 20-day moving average (MA) price at $86,000. This indicates that most short-term buyers are still in profit and hesitant to offload their holdings.

The Relative Strength Index (RSI) trending at 64.58 signals Bitcoin is still firmly in bullish territories after the mild-sell off on Monday washed out weak hands and over-leveraged traders.

If Bitcoin maintains steady support above $93,000 in the coming sessions, accompanied by a surge in trading volumes, it could strengthen the bullish momentum for another $100,000 breakout attempt. However, bulls will likely face short-term resistance near the psychological $95,000 mark.

On the downside, invalidation of this bullish scenario would occur if Bitcoin breaks below $93,000 and loses support at the 20-day MA of $86,000. Such a move could trigger increased selling pressure, potentially dragging prices toward the next support level around $80,000.