The MicroStrategy stock price is holding steady at a key resistance level as Bitcoin shows some weakness towards the first ETF trading day. The MSTR stock price is trading at $740, which is slightly below the August high of $797. The company has a market capitalization of more than $7 billion.
MicroStrategy and Bitcoin ETF (BITO)
MicroStrategy is a business intelligence company that provides its solutions to large companies like Pfizer, ServiceNow, Walt Disney, and Visa, among others. The firm offers solutions like hyperintelligence, embedded intelligence, consulting, and education. The company has also released a set of blockchain tools.
MicroStrategy has seen its revenue fall from more than $513 million in 2017 to more than $480 million in 2020. It has also seen its profits fall from more than $90 million in this period to a loss of more than $7.5 million in 2020. In the trailing twelve months, the company’s total loss has jumped to more than $420 million.
In a bid to save the company and reinvigorate growth, the company has become one of the biggest Bitcoin holders in the world. The firm has bought and currently owns more than 114,042 Bitcoins.
At the current price, these coins are valued at more than $7.09 billion. This valuation means investors value the company primarily as a Bitcoin company. Notably, the company’s Bitcoin holdings have turned profitable, with the prices currently hovering close to its all-time high.
Therefore, the MicroStrategy stock price will be in the spotlight as ProShares are set to debut the first Bitcoin futures Exchange Traded Fund (ETF) on Tuesday. The ETF will have a ticker symbol of BITO. Analysts will be looking at inflows into the fund.
Like I wrote on Monday, there is a likelihood that the Bitcoin and Ethereum prices will retreat after the ETF launch. Besides, institutional investors already have tools of investing in Bitcoin. Therefore, there is a likelihood that the MicroStrategy stock price will have a short-term decline soon.
MicroStrategy stock price forecast
The four-hour chart shows that the MicroStrategy stock price has been in a strong bullish trend lately. It has risen by more than 30% from the lowest level in September. This price action has coincided with the overall bullish trend of Bitcoin.
At the same time, the stock has formed what looks like a cup and handle pattern. It is currently close to completing the cup part of this pattern. The stock is above the 25-day and 50-day moving averages.
Therefore, because of the close correlation between the MSTR stock price and Bitcoin price, I suspect it will have a short pullback after the ETF starts to trade. Therefore, the next key level to watch will be the support at $650, which is about 12% below the current price.
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