Bitcoin and related stocks, including MicroStrategy (MSTR) and Bitcoin miners like those in the WGMI ETF, are showing significant technical improvements and a potential market comeback. Analysts suggest these uptrends may continue, making it an opportune time for investors to consider building positions, especially on pullbacks.
Bitcoin Stocks Surge: Is It Time to Buy MicroStrategy and Crypto Miners?
The cryptocurrency market is showing renewed vigor, with Bitcoin and other major digital currencies exhibiting signs of a sustained comeback. This positive momentum in crypto is directly translating to crypto-related equities, such as Bitcoin miners and treasury companies, which are also demonstrating technical strength.
MicroStrategy (MSTR) Leads the Pack
MicroStrategy, the world's largest Bitcoin treasury company, has experienced a notable rebound over the past month. This recovery is closely tied to upticks in long-term indicators like the monthly MACD (Moving Average Convergence Divergence). The monthly MACD histogram indicates a waning downside momentum, a potential early sign that the stock's bearish cycle may be maturing. Analysts are looking for the monthly stochastics to move above 20% for further confirmation of a long-term low, similar to trends observed in early 2023.
For long-term investors who can tolerate short-term fluctuations, current indicators suggest that building a position in MSTR could be advantageous. Even for short-term traders, MSTR appears attractive. The intermediate-term trend has turned positive since finding support near previous lows. The rising weekly MACD, coupled with timely counter-trend signals from the DeMARK Indicators®, suggests potential for further upside in the coming weeks, with the next major resistance level anticipated between $222 and $232, partly defined by the 200-day moving average (MA).
Investors can use the 50-day MA as a trailing support level for stop-loss placements.
Bitcoin Miners Show Similar Strength
Bitcoin miners are also experiencing a turnaround, as exemplified by the ETF proxy WGMI. Cipher Digital (CIFR) and IREN Ltd. (IREN), the largest holdings in the WGMI ETF, together represent over 30% of the fund's weighting. WGMI has surpassed its January high of nearly $52, buoyed by positive intermediate-term momentum, indicating potential for continued upward trends in the coming weeks.
The long-term trend for WGMI remains positive, with the price trading above the weekly cloud, distinguishing it from some related assets. A projection of its former trading range suggests an upside target near the October resistance level of approximately $68.
Investment Outlook
The improved sentiment in Bitcoin is positively impacting crypto equities, with both treasury companies and miners displaying healthier technical setups. Analysts suggest viewing pullbacks as opportunities to increase exposure to MSTR and other prominent Bitcoin-related stocks, as they appear well-positioned for continued gains in the second quarter.
This analysis was provided by Katie Stockton and Will Tamplin from Fairlead Strategies.
