Strategy stock fell over 5% on Friday, closing at $136, which marks a 20% decline from its September high and the lowest level since mid-September. This renewed drop comes as momentum in both the stock and Bitcoin appears to be fading, with ongoing concerns about share dilution among investors.
Bitcoin price decline impacts Strategy stock
Shares of Strategy, a firm holding one of the world’s largest public Bitcoin positions, have closely tracked the cryptocurrency’s recent downturn. Bitcoin’s price surged to a peak of $87,270 in September but has since fallen to about $80,980 as appetite in both futures and spot ETF markets has weakened.
Spot Bitcoin ETFs, which saw substantial net inflows in recent months, recorded more than $534 million in outflows this month, reversing September’s inflows of $2.6 billion and August’s $3.52 billion increase. Despite these outflows, total cumulative inflows for Bitcoin ETFs stand at $56.9 billion. Among these, BlackRock’s IBIT leads with $66 billion in assets.
Bitcoin futures open interest has dipped, shrinking to $52 billion from last month’s high of $62 billion, indicating lighter demand from speculative traders. Additionally, the Coinbase Bitcoin Premium Index has remained negative since late September, reflecting sustained caution among US-based investors.
Shares of Strategy often mirror Bitcoin’s movements, given the company’s significant exposure. The firm currently holds 848,250 BTC, with a total market value of $68.6 billion.
Strategy has funded much of its Bitcoin acquisition by issuing new shares. Outstanding shares have climbed to 352 million from just 93.2 million in 2022, raising worries about ongoing dilution for shareholders.
Mini dictionary: Strategy is a US-based publicly traded company known for holding significant amounts of Bitcoin on its balance sheet and using equity issuance to expand these holdings.
Key technical levels for Bitcoin and MSTR
Technical analysis indicates Bitcoin has performed poorly over recent weeks, moving from $87,270 at the end of September to around $80,890. After forming a double-top pattern, considered a sign of potential downward reversal, the price dropped below the $82,300 neckline. Bitcoin has also slipped under its 50-day moving average, and the Relative Strength Index (RSI) continues to worsen.
Analysts suggest the next key support for Bitcoin may be near $74,933, its lowest level in September. If a further drop occurs, the value of Strategy’s Bitcoin holdings could decrease to $63.4 billion.
| Metric | September High | Current |
|---|---|---|
| Bitcoin Price | $87,270 | $80,980 |
| Strategy (MSTR) Share Price | $171.40 | $134–$136 |
| Outstanding Shares | 93.2 million (2022) | 352 million |
| Bitcoin ETF Inflows (Sept) | $2.6 billion | Outflows $534 million (Oct) |
For MSTR shares, the daily chart reveals a decline from $171.40 on September 22 to $134, tracking the Bitcoin sell-off. The price has dropped below the 25-day moving average and the descending trendline connecting recent highs. The MACD indicator has shown a bearish crossover, with both lines pointing downward. This technical setup hints at further weakness, with the psychological $100 level as a probable target.
If the stock rises above $150, the bearish scenario may be invalidated, potentially signaling gains up to $200.
Analyst views and future outlook
Despite the recent correction, several analysts remain positive on MSTR’s prospects. Cantor Fitzgerald has set a price target of $208, Citigroup targets $240, and Bernstein offers an optimistic $350. B.Riley projects a more conservative rise to $195.
Analysts from multiple firms have issued price targets ranging from $195 to $350 for Strategy, reflecting continued faith in the firm’s Bitcoin-centric strategy over the longer term despite recent market headwinds.
As both Bitcoin and ETF inflow momentum cool, investors will be closely watching support levels in the weeks ahead as well as further dilution risk stemming from additional share issuance.
