Top 4 Reasons Why MSTR Stock Price May Crash to $100 Soon
Key Insights
- MSTR stock price has crashed in the past four weeks.
- Technicals suggest that the stock may continue falling this year.
- Bitcoin, its main asset, has weak technicals and fundamentals.
Strategy stock has declined over the past four weeks, erasing much of the rally recorded between April and May. Shares recently fell to around $114 after reaching a high of $196.68 last month. Several technical and macroeconomic factors suggest the stock could remain under pressure in the near term.
MSTR Stock Technical Indicators Point to Key Support
The daily chart shows that the Strategy stock price bottomed at $103.40 in February this year. It then started a modest rebound that pushed it to a high of $196.68. This rebound coincided with Bitcoin’s recovery towards the key resistance level at $82,000.
Recently, however, the stock has pulled back, moving from a high of $196 to $127. It has moved below the Strong, Pivot, Reverse level of the Murrey Math Lines tool, a sign that bears have prevailed.
Another sign of this is that the MicroStrategy stock price has dropped below all moving averages. Also, the Relative Strength Index (RSI) has been going down and is now nearing the oversold level.
Therefore, these technicals suggest that the stock will continue going downwards in the coming days or weeks. If this happens, the next level to watch will be the psychological level of $100, which the stock has failed to move below in the past few months. A drop below that price will lead to more downside.
MSTR stock price chart | Source: TradingView
Bitcoin Has a Combination of Weak Technicals and Fundamentals
The other key reason why the MSTR share price will crash further is that Bitcoin faces some major bearish fundamentals and technicals. Fundamentally, data shows that investors have continued selling their BTC holdings this year. They have now sold funds worth over $4 billion in May and June this year, possibly as investors rotate to the booming stock market.
The same trend is occurring in South Korea and Japan, where the Kospi and Nikkei 225 indices have reached record highs. The US, South Korea, and Japan are among the top players in the Bitcoin trading industry. As such, when their stock market is rising, it is common for investors to rotate from BTC.
Technicals are also pointing to more BTC weakness. It remains below all moving averages and is now attempting to move below the February low of $60,000. Dropping that level below again will point to further downside, potentially to $50,000.
More Bitcoin weakness will affect Strategy’s business as the company holds 845,256 coins. As a result, a Bitcoin drop to $50,000 would bring the value to $42 billion from the current $52 billion. Strategy has already recorded an unrealized loss of over $10 billion.
BTC price chart | Source: TradingView
MicroStrategy Faces Macro Factors
Meanwhile, the company is facing macroeconomic challenges as US consumer inflation rises and the labor market improves. A report released last week showed that the US economy added over 177k jobs last month. It was the third consecutive month that the NFP report has come out better than expected.
There are signs that US inflation has continued rising, with traders expecting it to come in at 4.2%. As such, there is a likelihood that the Federal Reserve will hike interest rates, a move that will affect Bitcoin and Digital Asset Treasury (DAT) companies.
Rising MSTR Stock Short Interest
There are signs that American investors are increasing their short positioning on the MSTR stock. Data shows that the short interest has jumped to 12%, the highest level in months. A rising short interest is a sign that these investors expect the stock to keep falling over time.
In summary, technicals suggest that Bitcoin and MSTR shares are heading downwards. Fundamentals also show that the company is facing major challenges that may lead to more downside in the near future.
The post Top 4 Reasons Why MSTR Stock Price May Crash to $100 Soon appeared first on The Market Periodical.
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