The MSTR stock value surged nearly 4% on Monday, driven by Bitcoin’s ongoing recovery and Strategy’s accelerated accumulation efforts, alongside shareholder dilution.
Summary
- MSTR stock price rallied as Bitcoin surpassed $92,000.
- The firm continued its accumulation of Bitcoin last week.
- Technical analysis indicates potential for further declines in the stock.
Strategy, formerly known as MicroStrategy, was trading at $163.25, showing a modest increase from this year’s low of $155. However, it remains approximately 70% below its all-time peak.
In a recent statement, the company revealed that it purchased 1,287 Bitcoins (BTC), raising its total holdings to 673,783. These assets are currently valued at over $62 billion, surpassing its market capitalization of over $45 billion. It’s also greater than the enterprise value of $59 billion.
Strategy acquired these coins following the sale of common shares worth more than $1.9 billion. The company still has over $11.5 billion in outstanding shares available in its at-the-money reserves that it can sell.
Additionally, the firm boosted its cash reserves by $62 million. It has been accumulating cash now that the mNAV ratio has fallen below 1, with hopes that these funds will be used for dividends and debt service.
MSTR stock climbed as Bitcoin maintained its upward momentum, reaching a peak of $92,500, reflecting a 15% increase from its December low. Concurrently, the Crypto Fear and Greed Index has exited the fear zone, while futures open interest has risen to $140 billion.
However, Strategy’s stock faces significant risks. The most pressing concern is the company’s ongoing efforts to dilute its shareholders, increasing the outstanding shares to over 300 million. This marks a rise from the 2022 low of below 100 million.
Another risk is the formation of a bearish flag pattern for Bitcoin, which has remained below the 100-day moving average and the Supertrend indicator, suggesting further declines.
MSTR stock price technicals indicate potential further declines
Strategy also encounters precarious technical conditions, remaining below the vital support level at $230.38, its lowest figure from March of last year. Like Bitcoin, it continues to trade under all moving averages and the Supertrend indicator.
The stock has remained below the Major S/R pivot point at $250 and all key moving averages. Consequently, it is likely to continue its decline as sellers aim for the key support at $10.
