Key Insights
- MSTR stock dropped in the premarket after the company announced its operations last week.
- The company paused its Bitcoin sales and boosted its MSTR dilution.
- Technical analysis suggests that the stock will continue falling after forming a break-and-retest pattern.
MSTR stock price retreated by over 2.75% in the premarket session. This happened as Strategy paused its Bitcoin sales and continued to dilute its shareholders. Strategy dropped to $92 from Friday’s close of $94.64 and is much lower than the all-time high of $543.
MSTR Stock Faces Pressure Amid Bitcoin Sales Pause
MSTR stock price remained under pressure on Monday as sentiment in the stock and crypto market worsened. Bitcoin dropped to $62,000, while the market capitalization of all coins fell to $2.16 trillion.
This retreat happened amid rising tensions between the US and Iran, with the two sides launching strikes and counterstrikes.
Meanwhile, the company said that it did not sell more Bitcoin last week. It ended the week with 843,775 coins valued at almost $53 billion. This is a sharp contrast to what the company did a week earlier, when it sold coins worth over $200 million.
Instead of selling Bitcoin, the company announced that it boosted its cash reserves by $450 million. That brought its total cash to $3 billion.
It did that by continuing to dilute its shareholders by selling shares worth over $466 million. It still has $23.7 billion worth of MSTR shares that it can sell through its at-the-money (ATM) authorization.
Strategy has been one of the most dilutive companies in Wall Street. Since 2020, the company has boosted the number of outstanding shares from 83 million in 2021 to 326 million today.
For a long time, the company justified this dilution by pointing to the Bitcoin per Share (BPS). It’s a figure that has reversed now that Bitcoin has slumped from its all-time high.
Strategy plans to sell more Bitcoin in the coming months, a move aimed at boosting its cash reserves. It needs these funds to cover the dividend payouts to its several preferred stocks, including STRC, STRF, STRK, and STRD. The urgency of these sales jumped after these assets dropped below its par level.
Bitcoin is Bracing for Volatility Ahead
Looking ahead, the Bitcoin price is expected to be highly volatile this week as several moving parts align. The most notable one is the fact that the US and Iran have restarted their fighting, which has pushed crude oil prices higher.
Brent and the West Texas Intermediate (WTI) rose to $79 and $75, respectively. Gasoline prices ticked upwards in the US.
The implication is that more fighting will lead to higher inflation in the US. As a result, there is a risk that the Federal Reserve will find it hard to cut interest rates this year.
The other potential risk for Bitcoin this week is the upcoming US consumer inflation data on Tuesday. Economists expect the report to show that inflation softened a bit last month. A higher inflation figure than expected will be bearish for Bitcoin and other risky assets.
Bitcoin will also react to the upcoming statement from Kevin Warsh, the new Federal Reserve Chair. His statement will provide a signal on what to expect later this year.
MSTR Stock Price Technical Analysis
The daily chart shows that Bitcoin price has been in a consolidation phase in the past few days. It has remained below the crucial resistance level of $104, its lowest level in February.
The stock has formed a break-and-retest pattern, a common bearish continuation sign. It also remains below the 50-day moving average, and is slowly forming a bearish flag pattern.
Therefore, the stock will likely continue falling, potentially to the year-to-date low of $81. A break below that level will point to more downside, potentially to the psychological level of $75.
On the other hand, a move above the resistance level of $104 will invalidate the bearish outlook and point to more gains.
Crispus is a distinguished Financial Analyst at, bringing over 12 years of expertise in cryptocurrency markets, specializing in Bitcoin and altcoins. Renowned for his sharp insights at the nexus of market trends and breaking news, Crispus delivers actionable analysis to empower investors. His work is prominently featured across leading platforms, including BanklessTimes, CoinJournal, HypeIndex, SeekingAlpha, Forbes, InvestingCube, Investing.com, and MoneyTransfers.com, cementing his reputation as a trusted voice in the financial world.
