- By Pongpat Khamchoo, CMT, CAIA Investopedia is partnering with CMT Association on this newsletter
- The contents of this newsletter are for informational and educational purposes only, however, and do not […]
By Pongpat Khamchoo, CMT, CAIA
Investopedia is partnering with CMT Association on this newsletter. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services
Chart 1: Bitcoin Faces Elevated Downside Risk
Using a Multiple Timeframe Analysis, the left pane shows the Weekly Chart, while the right pane displays the Daily Chart.
On the Weekly timeframe, Bitcoin has formed a Bearish Divergence in the MACD, a signal worth close attention. The last time this setup appeared — in late 2021 — it preceded a major crash in Bitcoin’s price.
On the Daily timeframe, Bitcoin has been trading sideways in a range between $108,000 and $124,000 since July. Earlier in October, price action attempted to break above resistance but failed, forming a False Breakout. It has since retreated toward the lower end of the range near $108,000, which coincides with the 200-day SMA — a critical support level.
A decisive break below $108,000 would not only confirm weakness on the daily chart but also validate the bearish signal from the weekly MACD, potentially opening substantial downside risk.
Chart 2: Ethereum Shows No Confirmation
Comparing the price action between Bitcoin and Ethereum highlights growing weakness across the broader crypto market.
In a healthy bull phase, both major cryptocurrencies typically rise together — with Bitcoin leading and Ethereum confirming the move. However, this time, Ethereum has failed to confirm Bitcoin’s attempt to break higher.
As shown in the upper pane, Ethereum did not make a new high in early October 2025 when Bitcoin tried to break out. The same divergence occurred earlier this year in January, when Bitcoin attempted to push higher while Ethereum formed a Lower High, signaling weaker momentum.
According to momentum principles, assets that underperform during an uptrend tend to fall harder during a downturn. Indeed, in the first half of 2025, Ethereum corrected over 50%, while Bitcoin declined only about 25%.
If the crypto market enters another correction phase, Ethereum is likely to face steeper downside risk than Bitcoin.
Chart 3: Strategy – A Leverage Warning for Bitcoin Holders
Among crypto-related equities, Strategy (MSTR) remains the most sensitive to Bitcoin’s price movements. The company’s balance sheet is deeply tied to Bitcoin—holding over 640,000 BTC—and much of that exposure was financed through debt and share issuance, making MSTR effectively a leveraged play on Bitcoin.
From a technical standpoint, conditions are deteriorating. The 20-day SMA has turned downward, acting as resistance, while the MACD has slipped into negative territory, reflecting a clear loss of momentum.
If Bitcoin breaks below its $108,000 support, selling pressure in MSTR could intensify through a negative feedback loop—where falling Bitcoin prices reduce MSTR’s asset value, prompting further equity selling.
In short, MSTR is not just correlated with Bitcoin—it exaggerates every move. If the crypto market turns down, this stock is among the first to watch, and potentially, the hardest hit.
Pongpat Khamchoo, CMT, CAIA is a CMT charterholder and guest contributor to Investopedia’s Chart Advisor. He has more than 16 years of market experience and won AsiaMoney’s Best Technical/Quantitative Analyst award in 2023. He currently serves as Head of Technical Analysis at Yuanta Securities (Thailand).
Shared content and posted charts are intended to be used for informational and educational purposes only. CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. CMT Association does not accept liability for any financial loss or damage our audience may incur.
