MicroStrategy stock has had a scintillating run in recent weeks as Bitcoin price rallied to multiple record highs. However, the BTC wave seems to be dissipating after coming within $500 of the milestone $100k price. With MicroStrategy (NASDAQ: MSTR) revealing on Monday that it bought 55,000 Bitcoin last week at $97,862, one can’t help but wonder if its time to pause buying, or even dump the stock.
Bitcoin price is at 94,577 as of this writing, meaning that Microstaregy’s latest purchase is technically in a loss of approximately $182 million. That is a substantial loss to record in accounting books in just under ten days. However, the Bitcoin rally is still on, and the crypto coin could certainly go all the way and hit the six-figure mark.
While Bitcoin price has gained 41 percent in the last month, Microstrategy has risen by 70 percent during that period. For a company whose primary investment is in Bitcoin, it would appear that buying MSTR stock at this point in time is like buying BTC at a premium.
However, a deeper look into the company’s portfolio shows that the it is still in profit. Microstrategy currently holds $21.5 billion worth of Bitcoin, bought at an average price of $56,741, including fees and expenses. That price is well below the current price, leaving a substantial profit margin.
Therefore, as things stand, MicroStrategy stock is still a good buy, relative to the current Bitcoin price. However, the company’s substantial $5.4 billion expenditure on BTC purchase near the $98,000 mark means that a prolonged stay below that level could strain its bottom line.
MicroStrategy price pivots at $401, and the upside will prevail if the price action stays above that mark. With the buyers in control, the first barrier is likely to be at $409. However, a stronger momentum will break above that level and potentially test $420.
On the other hand, moving below $401 will favour the downside. In that case, the price is likely to find the first support at $393. However, extended bearishness could break below that level, invalidating the upside narrative. Also, the momentum could send the price lower to test $384.
This post was last modified on Nov 26, 2024, 08:23 GMT 08:23