Bitcoin added ,000 in value in just a couple of weeks. What's next for BTC, as well as, COIN, RIOT and other cryptocurrency stocks? The Technician answers.

You saw it. I saw it. Bitcoin (BTC) went flying by THOUSANDS of dollars on the evening of Oct. 23. Indeed, over the course of just a couple of weeks, it added about $10,000 of value per bitcoin. It's like we're back in 2021!

In the midst of all this exuberance, I would like to point out an important trendline which is anchored to Dec. 30, 2022. This line was broken with some gusto on Aug. 16, 2023, and in the ensuing months, it has slowly healed itself and clawed its way back to the underbelly of the trendline. In my estimation, this is a price point that suggests exhaustion, not opportunity.

Besides the retracement to the underbelly of the trendline, kindly note we're almost at the 50% level over a long-term timeframe. This Fibonacci sequence spans Dec. 15, 2018, to Nov. 10, 2021 (its lifetime high). We are almost to the 50% mark.

Based in this explosive move higher, I'm putting a stake in the ground.

To be clear, I'm not shorting BTC directly. I stopped trading my crypto account in late 2021 and have been focused on directional options trades based on equities since then. Thus the question is: What equity presents an intriguing opportunity to take advantage of the supposed forthcoming weakness in bitcoin?

A variety of stocks are trading, including brokerages like Coinbase Global (COIN) and holding companies, such as Riot Platforms (RIOT) and Marathon Digital Holdings (MARA), but I've decided to go for a richly priced security that’s been around for decades: Microstrategy (MSTR).

My trade is not sophisticated: I have purchased in-the-money puts with a fair amount of time left on them. Specifically, I have gone long Jan. 19, 2024, puts with a strike of $450. The bid/ask isn't too bad (about 2%), and with almost 90 days left until expiration, there's hopefully plenty of opportunity for the exuberance of BTC to settle down.

I can only hope my projection turns out better than some the predictions of better-known market observers.

Tim Knight, a charting analyst with 35 years of trading experience, hosts Trading Charts, a tastylive segment airing Monday-Friday. He founded slopeofhope.com in 2005 and uses it as the basis of his technical charting and analysis. Knight authors The Technician column for Luckbox magazine. 

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