MicroStrategy ($MSTR) gargantuan buy – but stock continues to fall

by

As a seasoned researcher with over two decades of experience in the financial markets, I’ve seen my fair share of bulls and bears. The recent performance of MicroStrategy (MSTR) has left me scratching my head, much like a cat trying to catch its tail.

On Monday, MicroStrategy revealed a massive $5.4 billion Bitcoin purchase, which might have led some investors to anticipate a rise in the company’s stock price. However, contrary to expectations, MicroStrategy’s stock (MSTR) has dropped by 25% from its peak of $540, and there’s potential for it to drop even lower, possibly reaching $376 before trading begins.

It’s undeniable that Michael Saylor’s repeated borrowing strategies to acquire Bitcoin have demonstrated a remarkable intellect. Since early 2023, MicroStrategy (MSTR) has seen an astonishing surge of 2660%. However, it’s worth noting that the latest significant acquisition of 55,500 Bitcoins hasn’t yet noticeably boosted the value for either MSTR or Bitcoin.

$MSTR falls through trendline

Examining the short-term chart for $MSTR, we notice that the price has broken below its ascending trendline. The 0.618 Fibonacci level is currently providing support, but if the pre-market price continues to decline, there’s a chance the 0.786 Fibonacci could halt this ongoing drop instead.

Current reversal could still be bullish for $MSTR

Observing $MSTR on the weekly chart, you’ll notice an impressive upward thrust from the base of the bull flag in early August. By applying Fibonacci extensions to this move, we observe that the price hasn’t yet dropped as far as the 0.382 Fibonacci level, which, if it does and subsequently bounces, could signal a particularly bullish reversal.

At the base of the chart, in the Stochastic RSI, we see a worry arising as the indicator lines recently crossed paths and are now moving back downwards. It’s possible that this trend continues for a while, similar to what happened in mid-November last year until early January. However, eventually, these lines must descend, which will cause price momentum to drop along with them.

$MSTR price rejects at 10-year ascending trendline

Looking at the broader picture on a weekly basis, I’ve observed an upward sloping trendline that neatly intersects the peaks of my crypto investments back in 2014 and through 2015, then again in February 2021. More recently, it seems like my recent investment has bounced off from this same trendline.

Is it possible that we’ve hit the peak and the price will start to drop? Perhaps, but given the extremely steep trendline, there’s a chance the price could keep rising beneath it. A clear sign of a peak would be if Bitcoin demonstrates it has reached its maximum point. Currently, Bitcoin’s price is decreasing, but it doesn’t seem like a full bull market top has been established yet. Therefore, MicroStrategy (MSTR) might still have room for further growth.

Read More

2024-11-26 15:08