After weeks of heavy pressure, down more than 12%, MicroStrategy shares are trying to stabilize. Bitcoin’s rebound near $79,000 at press time helped ease fears about the company’s average cost base, which briefly dominated market sentiment in late January.

For a while, investors worried that a deeper fall in the price of Bitcoin could push MSTR into unrealized losses. Now that the immediate risk has faded, attention is shifting to whether a price recovery can emerge. Correlation data, capital flows and price structure suggest that the stock has entered a high-risk zone, where BTC’s next major move could set its direction for weeks.

Since the beginning of October, MicroStrategy is down about 62%, while Bitcoin is down about 38% over the same period. This gap highlights how MSTR behaves like a leveraged version of Bitcoin. When Bitcoin weakens, MicroStrategy usually falls harder because investors also factor in balance sheet exposure, debt and sentiment risk.

The Dune data supports this relationship. The 90-day correlation between MSTR and Bitcoin is close to 0.97 (close to 1), which means that the two assets have been moving in the same direction almost every day.

However, this does not contradict the larger decline. Correlation measures direction, not size. It shows that MSTR follows Bitcoin’s trend, but leverage and structural risks amplify the moves.

This dynamic became evident in late January, when Bitcoin briefly dipped below MicroStrategy’s average purchase price of around $76,000. That moment sparked fears of unrealized losses and added pressure on the stock. Bitcoin’s bounce above $78,000 reduced that threat and helped calm sentiment.

Even so, the correlation remains very high. If Bitcoin weakens again, MSTR’s share price is likely to follow, keeping downside risk elevated.

Capital flow data present a more complex picture. The Chaikin Money Flow (CMF), which measures whether money is flowing into or out of an asset using price and volume, has been trending higher since mid-January. Between January 14 and February 2, MSTR stock prices fell, but CMF continued to rise. This bullish divergence suggests that large investors were quietly accumulating during the weakness.

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CMF is now approaching the zero line, which separates net inflows from net outflows. A sustained move above zero would confirm that buying pressure is outweighing selling. The last net break above that level came in early September, after which the stock recovered nearly 25%. This makes CMF a key trigger for any recovery attempt.

However, MicroStrategy’s stock volume tells a different story. On-balance-sheet volume (OBV), which tracks whether trading volume supports price trends, has trended lower. During the recent decline, OBV fell to the side of the price and broke below its uptrend line. This indicates a weakening of participation and a decrease in retail interest.

Taken together, these indicators send mixed signals. CMF points to selective accumulation by larger players, while OBV shows that broader market share remains weak, likely due to the recent cost base impact.

When these metrics diverge, demonstrations often struggle to gain momentum. Without strong participation, upward movements tend to fade quickly. As a result, even if institutions position themselves early, sustained gains will likely require stronger Bitcoin performance.

With indicators sending mixed messages, MSTR price levels are now more important than ever. The most important support is near $139. This level has been tested several times and aligns with Fibonacci support from the October dip, making it the main decision point for the market.

If $139 fails on a daily close, the downside risk would increase sharply. In this scenario, prices could slide towards $107, implying roughly 20% more downside. Such a move would likely coincide with renewed weakness in Bitcoin. A deeper breakout would likely coincide with Bitcoin’s renewed weakness.

On the upside, the first major resistance is near $170, also around 20% of current levels. This level has capped several rebound attempts and remains a key barrier. A sustained break above $170 would improve the technical structure and return to confidence. Above that, the next hurdle lies near $190.

Clearing this area would change the trend decisively to the upside and confirm that capital inflows are translating into price strength.

MicroStrategy is currently focused near $139, with risk at $107 and resistance near $170. This wide range represents almost 20% in both directions, forming a two-sided decision zone. Bitcoin’s behavior will likely determine which side breaks first. A move above $80,000 could help MSTR challenge $170, while continued restlessness may extend the consolidation. If Bitcoin goes lower, the support near $139 becomes vulnerable.

Until a clear breakout occurs, volatility is likely to remain high and every rally is at risk of reversal.

Read the original story MicroStrategy (MSTR) Stock Barely Escapes Cost Basis Scare: Are You Awaiting a 20% Price Change? by Ananda Banerjee a beincrypto.com