MSTR stock price analysis as Strategy buys 3,081 Bitcoins

The MSTR stock price remained under pressure on Monday as Bitcoin and most altcoins experienced a flash crash following the recent rally during the weekend. Strategy was trading at $350, a few points above this month’s low of $328, and 23% below the highest level in July.

Strategy Continues Bitcoin Accumulation

The MSTR stock price remained on edge after Michael Saylor revealed that Bitcoin continued accumulating last week. It bought 3,081 coins at the average price of $115,829, bringing the value of the purchases to $359 million.

Data shows that Strategy, formerly known as MicroStrategy, now holds 632,457 coins, valued at over $70.9 billion. Its Bitcoin accumulation strategy has been successful, as the average price per coin was $73,527, which is 52% lower than where Bitcoin is today.

In his statement, Saylor noted that the Bitcoin yield this year so far was 25.4%. Bitcoin yield is a non-GAAP measure that looks at the growth of its Bitcoin holdings per share over a period, in this case, year-to-date.

Why MSTR Stock Has Deviated From Bitcoin

A closer look at the charts shows that Bitcoin and MSTR stock have deviated this year such that it remains in a technical bear market, even as BTC jumps to a record high of $124,200.

Strategy shares have lost their appeal for several reasons. First, unlike in the past, Strategy is not the only game in the Bitcoin Treasury industry. Today, there are over 100 companies with Bitcoin in their balance sheets, including popular names like Trump Media, Bullish, and GameStop.

Second, MSTR stock price has underperformed as investors remain concerned about its hefty valuation, with its market cap soaring to $100 billion. A sum of parts valuation approach shows that it is grossly overvalued.

Strategy is made up of two primary businesses: a dot-com era analytics platform used by top companies like Adidas, IAG, Cisco, Commonwealth Bank of Australia (CBA), and AllianceBernstein. In most cases , analysts place the value of this business at around $1 billion.

Its Bitcoin holdings are worth $70 billion. The combined valuation should be about $71 billion. MSTR has about $50 million in cash on its balance sheet and over $8 billion in debt, meaning that its enterprise value is less than $60 billion.

Concerns about its valuation likely explain why the net asset value (NAV) has dropped to 1.395, down from a high of 3.12 in November last year, a trend that may continue in the coming months.

MSTR stock price has also plunged as the company has made more plans to dilute its investors. Saylor has expressed hopes of raising $84 billion to buy Bitcoin, a move that will surge the number of outstanding shares.

Strategy Stock Price Forecast

There is a risk that the MSTR share price will continue falling in the coming weeks. The biggest risk, as shown below, is that Bitcoin has formed a few bearish patterns, including a rising wedge, a small double-top pattern, and bearish divergences. This performance means that the recent Bitcoin bullish run could end soon.

Meanwhile, the MSTR stock price has formed a double-top pattern at $427 and a neckline at $360, its lowest level in May. A double-top is one of the most common bearish chart patterns.

Strategy shares have moved below the 50-day and 100-day moving averages, which are about to form a mini death cross pattern. Therefore, the stock will likely continue falling as sellers target the important psychological point at $300.

Summary

MSTR stock price has crashed in the past few months as the company has faced numerous challenges, including competition and concerns about its valuation. The company is also at risk as Bitcoin has formed numerous bearish chart patterns that could trigger a bearish breakout in the coming weeks.