MSTR Stock Price at Risk as Bitcoin Falls, Jane Street Sells

Strategy shares pulled back this week as Bitcoin struggled to maintain momentum above $80,000. MSTR traded near $177 after failing to hold recent highs, while broader crypto sentiment weakened alongside slowing ETF demand.

Jane Street Dumped Bitcoin and MSTR Stock

Jane Street, one of the biggest financial services companies in the world, has been selling Bitcoin and the MSTR stock holdings. Its recent 13F filing showed that it reduced its holdings of funds like BlackRock’s IBIT and Fidelity’s FBTC. It rotated to Ethereum, with the company doubling its ETHA holdings.

The company also reduced its exposure to the MSTR stock and reduced its bullish call options by a third, and increased its bearish put options.

Still, it is worth noting that Jane Street is a high-frequency trading (HFT) and market maker, meaning that it has never been interested in holding assets for the long-term. Also, as a market maker, it buys and redeems these assets based on client flows.

Some of the biggest asset management companies still hold the MSTR stock. Capital International holds shares worth over $5.5 billion, while BlackRock and Vanguard hold over $3.1 billion and $2.6 billion in Strategy shares. Some of the other top holders are companies like Morgan Stanley, UBS, and State Street.

Bitcoin Price is at Risk of More Downside

The other main reason why the ongoing MSTR share price may be at risk of a steeper retreat is that Bitcoin has failed to cross the important resistance level of $82,000.

It has also formed a rising wedge pattern, which leads to a bearish breakdown. The chart below shows that Bitcoin has dropped below the lower side of the rising wedge pattern, pointing to more downside.

The Relative Strength Index (RSI) has continued to move downwards and is about to cross the crucial support level of 50. This is a sign that it is forming a bearish divergence pattern.

Altogether, Bitcoin will likely continue falling, potentially to the key support at $70,000 and below, a move that will reduce the value of Strategy’s holdings.

Fundamentals are also not supportive. For example, SoSoValue data shows that the spot Bitcoin ETF inflows have stalled in the past few days.

While the inflows started the month well, they have started to lose momentum, a sign that investors are capitulating. These funds shed over $600 million in assets on Wednesday, higher than the $233 million they lost a day earlier.

At the same time, macro data released this week showed that US inflation is surging. The headline Consumer Price Index (CPI) jumped to 3.8% in April, while the producer inflation hit a multi-year high of 6%. There is a risk that inflation will continue to rise amid US-Iran tensions.

Therefore, the Federal Reserve will likely not cut interest rates anytime soon. Earlier this year, the base case among most analysts was that the bank would deliver at least two cuts this year.

MSTR Stock Price Chart Analysis is Flashing Red

There is a risk that the recent MicroStrategy stock rally is losing momentum, which will lead to a crash. The daily chart shows that the stock peaked at $196 this month and has now slipped to $178. It failed to move above the 200-day moving average, which acted as a crucial resistance.

The ADX indicator has flattened at around 29. Therefore, there is a risk that the Strategy share price will drop sharply in the near term. If this happens, the next crucial support level to watch will be at $156, its lowest level on April 28 this year.