Key Insights:
- MSTR stock price is about to form a death cross pattern on the daily chart.
- Bitcoin price has formed a double-top pattern on the daily chart.
- The Bitcoin treasury industry has become highly saturated.
MSTR stock price has plunged in the past few weeks, moving from a high of $455 in July to the current $334, its lowest level since April. This downtrend could continue in the coming months as a death cross pattern nears and as the Bitcoin treasury industry gets highly saturated.
MSTR Stock Price Death Cross Pattern Nears
The daily timeframe chart shows that the MSTR stock price has been down strongly in the past few weeks. It has plunged from a high of $455 in July to the current $334.
Worse, the stock is about to form a death cross pattern when the 50-day and 200-day Weighted Moving Averages (WMA) cross each other. This pattern often leads to more downside as it confirms that the short-term momentum is continuing.
The stock has also formed a double-top pattern at $430 and a neckline at $357, its lowest level on May 28, which is also its lowest level this year.
MSTR stock has also dropped below the Ichimoku Kinko Hyo, confirming the downward trend. The Relative Strength Index (RSI) and the MACD indicators have pointed downwards.
Therefore, combining the Ichimoku cloud, death cross pattern, and the double-top points to more downside in the coming weeks. If this happens, the stock will likely continue falling as sellers target the key support level at $300, which is 10% below the current level.
Bitcoin Treasury Industry Getting Saturated
One of the top risks facing the Strategy stock price is that the industry has become highly saturated, giving investors more choice. This is unlike in the past when it was the only game in town.
A closer look at the recent developments shows that many struggling companies are pivoting to become Bitcoin Treasury companies. One of the most recent of these is Convano. This struggling Japanese nail spa operator has announced plans to accumulate Bitcoins worth over $3 billion, much higher than its market capitalization of over $300 million.
The same is happening in the United States, where struggling companies like GameStop, Trump Media, Semler Scientific, PropCap, and Fold Holdings have reinvented themselves into treasury companies. There are now over 100 companies with over 991,560 coins in their portfolio.
There are also signs that the Strategy stock is highly overvalued, considering that it holds Bitcoins worth over $68.9 billion, while its market capitalization is $95 billion. This means that the basic net asset value (NAV) stands at 1.381.
Bitcoin Price Technical Analysis Poses Risk to Strategy Stock
Meanwhile, the recent performance of Bitcoin price poses a major challenge for the company. The daily timeframe shows that the BTC price has formed a double-top pattern at the resistance level at $123,200 and a neckline at $111,835, its lowest level in August.
BTC price has moved below the 50-day Weighted Moving Average and the Ichimoku cloud indicator. Therefore, the coin will likely continue falling, with sellers targeting the next key support level at $100,550. A drop of Bitcoin to that level will point to more MSTR stock price sell-off.
Summary
The MicroStrategy stock price has been in a strong bearish trend in the past few weeks, and technical analysis points to more downside. It is about to form a death cross pattern and has already moved below the Ichimoku cloud indicator.
The Bitcoin treasury industry has become saturated, while the valuation is still high. Most notably, Bitcoin is sending mixed signals as it forms a double-top pattern on the daily chart and a rising wedge on the weekly chart.
Therefore, the stock will likely continue falling in the coming months as sentiment wanes. If this happens, it may crash to $300 in the coming weeks or even lower.
Chandan Gupta is a crypto analyst and senior journalist. With years of experience in crypto trading and market analysis, he simplifies complex concepts of technical and on-chain metrics, making them easy for users to understand and helping them make informed decisions. Additionally, he uncovers real-time actions of whales and insiders that impact overall market sentiment.
