MSTR Stock Flashes a Death Cross as mNAV Slump Continues

MSTR stock price could be at risk of further downside after forming a death cross pattern on the daily timeframe chart and as the mNNAV metric slumped. Strategy dropped to a low of $330, down by almost 30% from its highest level this year.

MSTR Stock Price Technical Analysis Points to More Downside

Strategy stock price has come under intense pressure in the past few months as demand for Bitcoin treasury companies slowed substantially.

Technicals suggest that the stock may fall further in the coming weeks. For one, it has now formed the risky death cross pattern, which happens when the 50-day and 200-day Weighted Moving Averages (WMA) cross each other.

The last time that MSTR stock price formed a death cross was in December 2021, trading at $55. It then plunged by over 75% after that.

MSTR stock price has also formed other highly bearish chart patterns. For example, it has moved below the Ichimoku Kinko Hyo Cloud, while the Awesome Oscillator has moved below the zero line.

These are all signs that bears are in control despite the potential tailwinds of interest rate cuts and the fact that the fourth quarter is the best one for Bitcoin prices.

Therefore, the most likely Strategy stock price forecast is bearish, with the next key target to watch being at $281, the extreme oversold level of the Murrey Math Lines tool. A drop below that price will point to more downside to $235, the lowest level in March this year.

The bullish MSTR stock price forecast will become invalid if it moves above the 50-day moving average at $360.

MSTR Stock Falling mNAV Poses Risks

One of the top risks the MSTR stock price faces is that the so-called Modified NAV (mNAV) data has been in a strong downward trend this year.

According to Bitcoin Treasuries, the mNAV has now plunged to 1.269, the lowest level it has been at since it started accumulating its Bitcoin during the pandemic.

mNAV is calculated by first looking at its total assets, and then subtracting all its liabilities, and then adjust specific adjustments. A sharp drop in the mNAV figure from a high of 3.4 in November last year to 1.2 today is a sign that investors don’t give its Bitcoin holdings much of a premium as they did in the past.

Most importantly, the company had placed a hard rule that it would not issue new MSTR shares as long as the mNAV multiple was below 2.5x. However, Saylor modified the limit, opening investors to more dilution.

Recent data shows that MSTR investors have gone through substantial dilution. TradingView said the total outstanding shares rose to 261 million, up from 75 million a few years ago.

With the mNAV rule not in place, investors will brace for more dilution as the company continues with its plans to raise over $84 billion to purchase Bitcoin.

For example, a recent filing showed that 90% of its common equity At the Market (ATM) raising was in common shares, with only $45 million sold through its preferred stocks.

MSTR stock is also facing major headwinds in relation to its real valuation. The company has a market capitalization of over $73 billion and an enterprise value of $109 billion, against Bitcoin holding of $73 billion, leaving a big unexplained gap.

Summary

The MicroStrategy stock price has been down strongly in the past few months. The situation may get worse amid new technical and fundamental headwinds.

It has just formed a death cross pattern on the daily timeframe, while the mNAV has continued falling. Also, the number of companies with Bitcoin in their balance sheet has continued rising this year.

Therefore, the most likely scenario is where the shares continue falling in the coming weeks.