MicroStrategy Stock (NASDAQ: MSTR) followed Bitcoin lower yesterday, sliding 4.2% before finding support at the 200-day moving average. However, despite bouncing $2,000 from the low, Bitcoin (BTC) is still vulnerable to another round of liquidation which means MSTR is also. And let’s not forget that MSTR has more than just Bitcoin to contend with at the moment.
US Stock markets sank yesterday as fears over China’s credit market triggered the second-biggest sell programme in history. A failure by the Chinese government to intervene to stop the collapse of property developer Evergrande sparked an exodus from equities. As a result, the US market suffered its worst day since October 2020 and worryingly for Microstrategy, the risk-off filtered through to cryptos.
At one stage this morning, BTC was down 8%. This follows yesterday’s 8% decline to bring BTC’s losses to almost 25% from the 7th of Sep. This is not ideal for MicroStrategy, which at last count held 114,0000 BTC. MicroStrategy founder and CEO Michael Saylor is undeniably the world’s biggest Bitcoin bull. Even after the latest pullback in price, MSTR’s BTC holdings are almost $5 billion, which is as scary as it is exciting. The business intelligence firm is now more akin to a publicly-listed Bitcoin fund than a publicly-listed company.
Insider Sell Shares
Saylor’s latest purchase came a week ago when he announced he added a further 5,050 BTC to the kitty, firmly in line with his plan to average up and down. So far, the program has worked well. The average cost of MSTR’s purchase is $3.16b, which means they are $1.7b in profit at today’s price. However, it appears not everyone shares Saylor’s conviction. Over the last month, both the COO and CFO have liquidated a large portion of their stock. However, Bitcoin maximalist Michael Saylor remains resolute.
MicroStrategy Stock Technical Analysis
The daily chart shows that MicroStregy stock traded as low as $568.29 yesterday, bouncing from just above the 200-day moving average at $565.67 to finish the day at $588.39 (-4.2%). Whilst the 200 DMA is a significant support level, the trend that sits below it may have even more importance. The rising trend line from November 2020 is seen at $529 and should be considered the long term bull trend.
If MSTR closes below the 200 DMA and the trend, it would mark a first for 2021 and undoubtedly encourage selling. In this event, a logical target is the 20th of July’s $470 low. However, BTC was trading at $29,000 on that date and would need to drop 30% to get there again.
For the moment, it’s hard to say what happens to the price of MicroStrategy stock, although, as I type, Bitcoin is fighting back and seems to have found buyers. However, the week is still young, and anything could happen. Therefore, traders should brace for a raft of market-moving headlines and extreme price volatility.
MicroStrategy Stock Chart (Daily)
MSTR vs Bitcoin (BTC)
For more market insights, follow Elliott on Twitter.