MSTR stock soared nearly 4% on Monday as Bitcoin continued its recovery and Strategy accelerated its Bitcoin accumulation and shareholder dilution.
summary
- MSTR stock rebounded as Bitcoin rose above $92,000.
- The company continued to accumulate Bitcoin last week.
- Technical analysis suggests that the stock has further downside potential.
Strategy, formerly known as MicroStrategy, was trading at $163.25, up slightly from this year’s low of $155. It remains about 70% below its all-time high.
The company said in a statement that it acquired 1,287 Bitcoins (BTC), bringing its total holdings to 673,783. Its current holdings are valued at more than $62 billion, exceeding its market capitalization of more than $45 billion. This is higher than the company’s value of $59 billion.
Strategy purchased these coins after selling over $1.9 billion worth of common stock. There are still more than $11.5 billion in outstanding shares available for sale.
The company also increased its cash reserves by $62 million. Now that the mNAV ratio is below 1, the company is accumulating cash. As a result, we expect this cash to be used to pay dividends and repay debt.
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As Bitcoin continues its recent rally, MSTR stock has risen, reaching a high of $92,500, up 15% from its December lows. Additionally, the Crypto Fear and Greed Index moved out of the fear zone, with futures open interest increasing to $140 billion.
Still, strategy stocks face significant risks. The most notable risk is that the company continues to dilute shareholders, with more than 300 million shares outstanding. The number has risen sharply from its lowest point of less than 100 million in 2022.
Another risk is that Bitcoin price is forming a bearish flag pattern, as shown below. It remains below the 100-day moving average and the supertrend indicator, meaning the coin will continue to fall.
Bitcoin price chart | Source: crypto news
MSTR stock price technicals suggest further downside
The strategy also faces risky technicals. The currency remains below key support at $230.38, the lowest level seen in March last year. Similar to Bitcoin, it remains below all moving averages and supertrend indicators.
MSTR stock price chart |Source: TradingView
The stock remains below the major S/R pivot point of $250 and all moving averages. Therefore, the stock could continue to fall as sellers target the key support at $10
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