- Summary:
- MicroStrategy stock price has declined by more than 25 percent this week. What next for MSTR after Bitcoin breaks $95 k support?
Microstrategy stock price extended its losing streak in Friday’s pre-market session, signaling a likelihood of registering the first five successive loss-making sessions since September. The stock traded at $309 at the time of writing, having lost 5.2% of its value to bring its losses this week to 25%- its largest on record.
Bitcoin’s decline below $100k spells trouble for MicroStrategy stock price
Bitcoin price dropped below $95k as of this writing, injecting a bearish sentiment across the crypto market and extending Microstategy stock price decline. In addition, means that the company’s latest two bulk BTC purchases are in loss.
Microstrategy (NASDAQ: MSTR) bought 15,350 BTC between December 9 and 15 for $1.5 billion at an average price of $100,389. In mid-November, it bought 21,550 BTC for $2.1 billion at an average price of $98,783.
Why MicroStrategy stock is still a good buy
A look at MicroStrategy’s portfolio shows that the company’s cash position is still solid. It held 439,002 BTC bought at an average price of $58,219 as of December 16. That gives a substantial profit going by the Bitcoin price of $94,054 as of this writing.
Also, the company is set to be included in the Nasdaq 100 Index starting Deember 23. That could attract significant institutional purchases of the stock, and help MicroStrategy stock price recover. Also, the stock has risen by 371% year-to-date, creating a significance divergence between the value of its Bitcoin holdings and market capitalization.
MicroStrategy’s BTC holdings currently stand at $41.2 billion while its market cap is at $79.5 billion. That divergence attracted criticism that the company is overvalued, considering that Bitcoin has only risen by 121% year-to-date. Bitcoin consists of more than 95% of the value of company’s total assets.
On the positive side, however, the elevated stock price has enabled the company to sell equity at a relatively expensive price to fund its BTC purchases. Ultimately, that has secured its cash position.
MicroStrategy stock price prediction
The momentum on MicroStrategy stock price calls for further downside below the $320.20 pivot mark. The downward momentum will likely find the first support at $300.70. However, an extended control by the sellers could lead to further decline to test $280.70.
Conversely, the momentum will shift to the upside if the price breaks above $320.20. With The buyers in control, the price will likely encounter the first barrier at $339.05. The downside narrative will be invalid if the price breaks above that level. In addition, the momentum could take the price higher and test $355.20.
