Michael Purves, CEO of Tallbacken Capital Advisors, has reiterated his earlier warning about the potential for significant declines in Bitcoin’s value, especially following a recent technical breakdown in the cryptocurrency market. His concerns come after a noteworthy trend was observed in November, where a monthly Moving Average Convergence Divergence (MACD) indicator generated a sell signal for Bitcoin for the sixth time. Historically, such signals have preceded substantial drops in Bitcoin’s price, averaging around a 60% decrease thereafter.
Bitcoin’s recent performance appears to validate Purves’ predictions, as it reached its lowest point since the day after Donald Trump’s victory in the 2024 election. The most recent technical indicator giving traders pause is the emergence of a bearish head-and-shoulders pattern. This pattern comprises a left shoulder at a peak around $110,000 in early 2025, an all-time high serving as the head, and a right shoulder forming around $98,000 earlier this year, with a critical neckline established at approximately $76,000.
Purves pointed out the significance of the $76,000 level, noting that it aligns with the average acquisition cost for MicroStrategy (MSTR), a major player in the Bitcoin investment landscape. He warned that if Bitcoin’s price dips below this threshold, it could trigger a widespread forced deleveraging of Bitcoin holdings among investors, leading to further price declines.
In December, MicroStrategy made headlines by announcing a US dollar reserve of $1.44 billion, a move designed to cover interest and dividend payments, thereby shielding the company from the financial repercussions associated with a declining Bitcoin market.
