Key Insights
- MSTR stock price rose slightly after boosting its cash reserves last week.
- The company raised $225 million in cash by selling shares.
- Technical analysis suggests that the Strategy shares will drop further.
MSTR stock price rose by over 1% in the premarket session after the company revealed its new corporate actions and as Bitcoin remained steady. Strategy rose to $96, up by 18% from its lowest level this month. So, will the stock continue rising amid the ongoing dilution?
This article is for informational purposes only and does not constitute investment or financial advice. Stocks and cryptocurrencies are volatile assets, and past performance does not guarantee future results.
Strategy Continues to Dilute its Shareholders
Strategy, formerly known as MicroStrategy, has been under intense pressure in the past few months. Bitcoin price has dropped from over $126,300 to $64,000 today.
At the same time, all its preferred stocks have dropped substantially from par, putting pressure on the company to raise cash. In a recent statement, the management said that it will raise cash to cover its dividend payouts for about two years.
In its most significant event, the company sold Bitcoin worth over $200 million, abandoning its stance on never selling its coins. The management had signaled that it would sell coins worth over $1.5 billion over time.
According to Strategy’s latest Form 8-K and ATM issuance update, the company raised $225 million through at-the-market share sales during the week. The filing showed unrestricted cash and cash equivalents increased to approximately $3.2 billion.
Bitcoin Price Has Stabilized Despite Its Selling
Surprisingly, contrary to popular belief, Bitcoin price has rebounded since Strategy started selling its coins. Bitcoin was trading at $64,688 today, up sharply from the year-to-date low of $57,724.
This rebound has helped the company’s assets jump since it holds 843,775 coins currently valued at $54 billion.
One reason for this is that American investors have continued buying Bitcoin. Data shows that spot Bitcoin ETFs attracted assets in the last four consecutive days. These funds added assets worth almost $500 million in this period. In total, the net inflows this month was over $200 million.
These inflows are notable because they are happening at a time when a risk-off sentiment has spread in the market. The stock market has pulled back sharply in the past few days, while crude oil prices have soared amid the rising tensions in the Middle East. Brent, the global benchmark, crossed the key milestone of $90 on Monday.
One reason for the ongoing Bitcoin performance is that the US published a weak consumer and producer inflation report last week. According to the U.S. Bureau of Labor Statistics, both Consumer Price Index (CPI) and Producer Price Index (PPI) inflation slowed during the latest reporting period.
Still, Strategy investors are facing potential risks. The first one is that it is unclear whether the ongoing Bitcoin recovery will persist. Recently, these bounces have turned out to be brief.
Another risk is that they will be diluted for a while. Data shows that the number of outstanding shares have jumped from below 80 million a few years ago to over 330 million today.
Technicals Suggest MSTR Stock May Drop Further
The other risk is that the Strategy stock faces some bearish technicals. It remains below the 50-day Exponential Moving Average (EMA), a sign that bears are in control for now.
At the same time, the stock has dropped below the Supertrend indicator, which normally indicates that bears have prevailed. The stock has also formed a bearish flag pattern, which normally leads to more downside.
Therefore, there is a risk that the MSTR stock price will drop further in the coming months as dilution continues. If this happens, the next key level to watch will be at $80. A move above the key resistance at $104 will 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.
