Following two days of gains, the Microstrategy stock price has stalled. After a $500 million debt offering, MSTR is even more reliant on Bitcoin.
Microstrategy closed at $508.65, down $4.34 (-0.85%).
Say what you like about Microstrategy (NSDQ: MSTR) CEO Michael Saylor. One thing you cant say is he lacks conviction. The longtime Bitcoin advocate has once again put his money where his mouth is.
In August 2020, Sayler lit the cryptocurrency market alight when he announced Microstrategy planned to embark on a Bitcoin buying spree to diversify its treasury holdings.
Since then, the business intelligence company has accumulated over $3.5 billion worth of BTC. Considering the company’s total market cap is around $4.5 billion, they are less diversified than ever.
Following El-Salvador’s decision to accept Bitcoin as legal tender, Saylor announced on Twitter that MSTR would offer $400 million in senior secured notes to purchase more BTC.
The move which has left the Microstrategy stock price even more reliant on its BTC holdings is both audacious and very risky.
Only, the Bitcoin community’s ‘GigaChad’ wasn’t finished there….
Junk Bond Valuation
The increased offering is the first time a company has sold ‘Junk” Bonds for speculative purposes. Surprisingly, the offering was over-subscribed by a large margin.
It shows that institutional investors are still looking for ways to gain exposure to the Bitcoin price.
MSTR Price Outlook
We can see on the daily chart that MSTR recovered the key 200-Day moving average at $453.74. This can be seen as a positive development.
Increasing volume over the last few days also adds to the bullish outlook.
However, the stock is not out of the woods and has a long way to go to resume its 2020 uptrend.
Bulls may look to add MSTR here with a tight stop below the 200 DMA at $453.74. If MSTR drops below this level, it could lead to a broader liquidation.
A word of caution: Bitcoin trades over the weekend; MSTR doesn’t. A large drop in BTC over the weekend may result in sell stops being filled at worse levels than predicted.
Microstrategy Stock Price (Daily Chart)
Microstrategy vs. Bitcoin
Follow Elliott on Twitter.