The Bitcoin Proxy Stock Is Breaking Down – Here’s What Could Happen to MicroStrategy

MicroStrategy, the company that basically trades like a Bitcoin ETF on steroids, is flashing some serious warning signs. Chart analyst Patrick Karim just sounded the alarm, saying the stock could drop another 40% from here, and honestly, the chart backs him up.

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Momentum Is Breaking Down

If you zoom out, MicroStrategy’s long-term uptrend looks like it’s finally running out of steam. The stock has now fallen below its rising support line and the 12-month moving average, which are two key levels that often mark trend reversals.

Karim highlights that the momentum reset, that dip you see in the lower panel of his chart, is still happening. In plain terms, the stock hasn’t finished cooling off yet. Every time MicroStrategy’s momentum has broken like this in the past, a big correction followed.

So even though the company still holds one of the largest Bitcoin treasuries on the planet, the chart says it might be in for a deeper pullback before the next move higher.

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Weakening Trend and the ROT Zones

Karim’s chart also shows something called ROT zones, short for Rate of Turn, basically a way to track how fast price momentum builds or fades.

Source: X/PatrickKarim

We saw a higher ROT zone during MicroStrategy’s explosive rally, followed by a lower ROT zone at the recent top, a classic sign of slowing momentum. Once that pattern appears, the next phase is usually a correction.

Right now, the price has broken below that lower ROT zone. Karim thinks we could see a retest of the $170-$180 range, and if that fails, a deeper move toward $120-$130 isn’t off the table, that’s roughly a 40% slide from where we are.

Why It Matters for Bitcoin and Key Levels to Watch

Karim marked out a few important lines on his chart: Around $400–$500, if the stock stays below this zone, the bullish case weakens fast. Around $16, key short-term support. Lose that, and momentum could accelerate to the downside. Around $120–$130, that’s the danger zone if things really start to unravel.

MicroStrategy isn’t just another tech stock, it’s basically a Bitcoin proxy. Its price tends to mirror broader Bitcoin sentiment since most of its balance sheet is BTC.

So when MSTR starts to break down like this, it often signals risk-off behavior across the crypto market. It doesn’t mean Bitcoin is doomed, but it does suggest that some investors are trimming exposure to both the stock and BTC itself.

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The Bottom Line

Karim didn’t sugarcoat it: “MicroStrategy is in a heap of trouble.” The stock’s technical setup looks heavy, momentum is fading, and it’s now trading under key moving averages. Unless it reclaims that $400-$500 range, the trend clearly points lower.

The next few weeks will show whether this is just a healthy correction, or the start of a deeper unwind. Either way, if you’re watching Bitcoin’s macro health, keep one eye on MicroStrategy. It often tells the story before the charts of BTC do.

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