The MSTR stock price jumped by nearly 4% on Monday as Bitcoin continued its comeback and as Strategy accelerated its accumulation and shareholder dilution.
Summary
- MSTR stock price rebounded as Bitcoin moved above $92,000.
- The company continued its Bitcoin accumulation last week.
- Technical analysis suggests that the stock has more downside.
Strategy, formerly known as MicroStrategy, was trading at $163.25, up modestly from this year’s low of $155. It remains ~70% below its all-time high.
In a statement, the company said that it acquired 1,287 Bitcoins (BTC), bringing the total holdings to 673,783. Its current holdings are valued at over $62 billion, higher than its market capitalization of over $45 billion. It is also higher than the enterprise value of $59 billion.
Strategy bought these coins after selling common shares worth over $1.9 billion. It still has over $11.5 billion in outstanding shares in its at-the-money reserves that it can sell.
The company also increased its cash reserves by $62 million. It has been accumulating cash now that the mNAV ratio has dropped below 1. As a result, it hopes that this cash will be used to pay dividends and service its debt.
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MSTR stock rose as Bitcoin continued its recent rally as it reached a high of $92,500, up by 15% from its lowest point in December. Also, the Crypto Fear and Greed Index has moved out of the fear zone, while futures open interest rose to $140 billion.
Still, Strategy stock faces major risks. The most notable risk is that the company continues to dilute its shareholders, raising the outstanding shares to over 300 million shares. It has jumped from the 2022 low of below 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, meaning that the coin will continue falling.
Bitcoin price chart | Source: crypto.news
MSTR stock price technicals point to more downside
Strategy also faces risky technicals. It has remained below the important support level at $230.38, its lowest level in March last year. Like Bitcoin, it remains below all moving averages and the Supertrend indicator.
MSTR stock chart | Source: TradingView
The stock has remained below the Major S/R pivot point at $250 and all moving averages. Therefore, the stock will likely continue falling as sellers target the key support at $10
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