Although President Trump ran on a platform of restoring order in America, his ambitions have encountered a serious reality check. According to a recent Reuters report, U.S. consumer inflation increased at the fastest pace in nearly one-and-a-half years in January. This framework may have cynically positive implications for cryptocurrencies, which may then bode well for blockchain proxy MicroStrategy (NASDAQ:MSTR).
In some ways, thanks to MicroStrategy’s ravenous appetite for digital assets, MSTR stock plays the role of a crypto coin or token on Wall Street. Stated differently, speculators can anticipate searing highs when MSTR catches a bullish wave. But on the other end of the spectrum, the losses can be cruel and severe. It’s basically the modern-day Wild West.
However, there is a method to the madness. Last week, a Barron’s report — citing research from Pew — noted that 42% of men ages 18 to 29 have invested in, traded or used cryptocurrency. This statistic compares quite significantly to women in the same age range, of whom only 17% have invested in digital assets.
Still, the takeaway is that young people generally gravitate toward cryptos. Stated differently, crypto has become the new generation’s gold. That should be a big positive considering the underlying motivation for safe-haven assets. As Money Morning’s Chris Johnson pointed out, “investors are now moving back to the well-known hedge for market volatility as inflation, interest rates and geopolitical risks are moving to the front of investor’s concerns.”
Another factor that may pique curiosity is the behavioral dynamic undergirding MSTR stock. Essentially, FOMO or the fear of missing out fuels MicroStrategy — and it’s not hard to see why. Again, when MSTR hits, it hits big. When investors sense a gargantuan swing coming, they’re going for it.
Indeed, the statistical evidence is compelling. From a purely stochastic or temporal view of the past five years’ worth of price data, a position entered into MSTR stock has a 53.21% chance of rising by the end of it. Over a four-week period, the long odds improve slightly to 53.82%. Therefore, the security features an upward bias.
That said, certain parameters or conditions inspire a different set of behaviors. For example, last week, MSTR stock gained just under 5.7%. Whenever MSTR moves up between 5% and 10% during a one-week period, the subsequent week sees long odds of 64.71%. Over the next four weeks, this success ratio slips to 58.82%. Nevertheless, the odds are still noticeably better than a coin toss.
What’s also intriguing is that MSTR stock appears to be forming a bullish pennant formation — a foundation of which appears to have materialized in September last year. This potential framework adds further urgency to the notion that FOMO may be driving bullish sentiment in MicroStrategy right now.
Throw in the fundamentals of crypto being an inflation hedge and suddenly, MSTR stock looks far more reasonable. To be fair, arguably nothing can take away the volatility risk tied to crypto-based investments. However, if the virtual currencies themselves are too wild of a wager, MicroStrategy could be a possible alternative.
