The MSTR stock has been in a strong downward trajectory this year as Bitcoin has plunged and as interest in Digital Asset Treasury (DAT) companies has waned. Strategy dropped to $175, its lowest level since October 7.
MSTR Stock Price Could Have a Relief Rally
There are two main technical reasons why the Strategy stock price will have a relief rally in the near term. First, oscillators suggest that the Strategy stock price has become highly oversold, with the Relative Strength Index (RSI) plunging to the oversold level of 26.
In most cases, bear markets normally start when assets are in the overbought levels, while bull markets starts when they get oversold. It is the same concept where Crypto bull runs start when the Crypto Fear and Greed Index moves to the extreme fear zone.
READ MORE: XRP Price Prediction: Here’s Why Ripple May Crash Soon
Second, the MSTR stock price may rebound to complete a pattern known as a break-and-retest, which happens when an asset moves below or above a crucial support or resistance level. In this case, Strategy share price crashed below the important support level at $230, its lowest level in February, March, and April this year.
For the downtrend to continue, the stock will likely need to move back up and retest it, which would imply a 32% surge from the current level.
Strategy to Benefit From a Bitcoin Price Rebound
The other notable catalyst for the MSTR share price is that the Bitcoin price has also moved to the extreme oversold level and analysts believe that it will rebound. Besides, the coin has moved into a bear market countless times since its launch in 2009.
One major catalyst for Bitcoin is that it is often seen as a digital form of gold. It has a capped supply of 21 million coins, most of which have been mined. The coin is still seeing strong demand, with its ETFs hauling over $50 billion in inflows since January last year.
Additionally, the Federal Reserve will likely continue cutting interest rates in the near term, a move that will accelerate after Donald Trump replaces Jerome Powell. The most recent media report shows that Kevin Hassett, a major Trump ally, has emerged as the most likely Fed Chair.
Meanwhile, MSTR’s short interest has gone up and is nearing 10% today and the company is feuding with JPMorgan. JPM has warned that the company could be excluded from major indices. With all this negativity, there is a likelihood that the stock will go through a short-squeeze as retail traders gang up against JPMorgan.
Additionally, Wall Street analysts are optimistic about MSTR, with the average stock target being $524. Some of the most bullish analysts are from top companies like Bernstein, Mizuho, BTIG, and Citi.
READ MORE: Dogecoin Price Prediction: Sits at Key Level Ahead of Bitwise DOGE ETF Launch
