Morning Note: MicroStrategy’s Bitcoin Bet, DeepSeek AI Rivalry, and Oil Price Shifts

MicroStrategy Share Price Now Depends on Bitcoin Price?

MicroStrategy has once again made a bold financial move by raising $563.4 million from issuing 7.3 million convertible preferred shares at $80. The market turned risk-averse and sparked a Bitcoin retreat in the wake of tariff threats against Mexico, Canada, and China, dampening MicroStrategy stock. However, the business insists on keeping its long-term strategy, with 471,107 BTC on its balance sheet, bought for $30.4 billion at an average of $64,511 per coin.

(MSTR Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of MicroStrategy’s share price remains bullish, as indicated by the higher highs and higher lows. Yesterday, it opened with a gap down but managed to surge with bullish momentum and closed the candle above the upward trendline. This suggests that the bullish momentum persists, and there is a possibility of its continuing upward movement.

Is the Market Overreacting to DeepSeek's AI Models?

At the end of January, the AI models made by the Chinese company DeepSeek quickly gained traction owing to their price competitiveness. The company could design the models at a fraction of the cost without compromising performance. This ensuing sell-off of Nvidia shares was driven by speculation from investors that increased competition in the AI chip market may take Nvidia's share and profitability. However, the recent sell-off could be an overreaction, as while DeepSeek has successfully completed the training of its AI model, inference is a different matter altogether.

(NVIDIA Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the recent price action broke through the trendline, resulting in a significant gap down that drove the price lower. Although bullish momentum attempted to push the price upward, it was overwhelmed by stronger bearish pressure, pushing the price back down. Currently, the price is testing the previous support zone. If it breaks below this level, there's a high likelihood that the bearish momentum will continue, potentially leading to a retest of another support zone below.

Oil Prices Fall as U.S. Delays Tariffs on Canada and Mexico

Oil prices recently fell after U.S. President Donald Trump agreed to postpone by one-month heavy tariffs against Mexico and Canada, the premier foreign oil suppliers of the United States. That would delay the 25% tariffs, including a 10% tariff on energy imports from Canada, which were scheduled to take effect on Tuesday.

However, even if the tariffs are paused, Canada will remain susceptible to trade wars until it expands its present export options beyond the U.S. scope by perhaps building more pipelines from oil fields to ports. Additionally, OPEC+ deliberated on President Trump's request to raise production on Monday but has decided to stick to its plans of gradually raising oil outputs from April.

(Crude Oil Futures Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the recent price action has rebounded several times from the rectangular support zone but was rejected, and the previous daily candle closed below this support zone. If the subsequent daily candle fails to close above the support zone, bearish momentum could push the price downwards, potentially testing the crucial support zone below.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.