MSTR’s stock price jumped nearly 4% on Monday as Bitcoin continued its rally and Strategy accelerated its shareholder accumulation and dilution.
Summary
- MSTR stock price recovered as Bitcoin surpassed $92,000.
- The company continued to accumulate Bitcoin last week.
- Technical analysis suggests the stock has more downsides.
Strategy, formerly known as MicroStrategy, was trading at $163.25, a modest rise from this year’s low of $155. It remains approximately 70% below its all-time high.
In a statement, the company said it acquired 1,287 Bitcoins (btc), bringing the total holdings to 673,783. Its current holdings are valued at more than $62 billion, higher than its market capitalization of more than $45 billion. It is also higher than the enterprise value of $59 billion.
Strategy purchased these coins after selling more than $1.9 billion worth of common stock. It still has more than $11.5 billion in outstanding shares in its at-the-money reserves that it can sell.
The company also increased its cash reserves at $62 million. It has been accumulating cash now that the mNAV ratio has fallen below 1. As a result, it expects this cash to be used to pay dividends and pay down its debt.
MSTR stock rose as Bitcoin continued its recent rally and hit a high of $92,500, up 15% from its December low. Additionally, the Crypto Fear and Greed Index has broken out of the fear zone, while futures open interest rose to $140 billion.
Still, Strategy stock faces significant risks. The most notable risk is that the company continues diluted its shareholders, raising the number of shares outstanding to more than 300 million shares. It has jumped from the 2022 low of less than 100 million.
The other risk is that, as shown below, Bitcoin price has formed a bearish flag pattern. It has remained below the 100-day moving average and the Supertrend indicator, which means the coin will continue to fall.
MSTR Stock Price Technical Data Points to More Downsides
The strategy also faces risky technical aspects. It has remained below the important support level of $230.38, its lowest level in March last year. Like Bitcoin, it remains below all moving averages and the Supertrend indicator.
The stock has remained below the Major S/R pivot point at $250 and all moving averages. Therefore, shares are likely to continue falling as sellers target key support at $10.
