The MSTR stock price has moved to a bear market after falling by over 23% from its highest point this year. Worse, it could be on the verge of more downside as it is about to form the dreaded death cross pattern.
MSTR Stock Price Technical Analysis
The daily chart shows that the Strategy stock price has been in a downtrend after peaking at $457 in July. It has now slumped to $341 and is hovering near its lowest level since April.
The chart shows that MSTR share price has dropped below the support at $357, its lowest level since June and the neckline of a double-bottom pattern.
It has also formed a bearish flag pattern, which comprises of a vertical line and a consolidation. This pattern often leads to more downside over time.
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Worse, the spread between the 50-day and 200-day Weighted Moving Averages (WMA) has continued to narrow. As such, it has a risk of forming the dreaded death cross pattern that leads to more downside.
If this happens, the next Strategy stock price target is $230, its lowest level in March this year, and 32% below the current level. On the flip side, a move above the resistance level at $400 will invalidate the bearish Strategy stock price forecast.
MSTR stock chart | Source: TradingView
Why Strategy Stock is at Risk
There are a few reasons why the MSTR share price is at risk of more downside. First, interest in the Bitcoin treasury companies has faded in the past few months. Indeed, a closer look at most firms that have adopted this strategy reveals that they have underperformed the market. This includes the popular names like GameStop and Trump Media.
The stock has also plunged because of the fact that the treasury industry has become highly saturated. There are now over 100 companies that have bought Bitcoin.
Moreover, more companies are accumulating other tokens aggressively. For example, Tom Lee’s BitMine is buying thousands of Ethereum coins. SharpLink has also bought Ethereum, while treasuries on coin like BNB, Tron, and Solana have been launched.
Most importantly, investors are likely looking at the real valuation of Strategy. The company has a market capitalization of over $95 billion, much higher than its Bitcoin holdings of over $70 billion. That $25 billion gap is hard to account for as its core analytics business is not worth that much, as this sum of parts valuation found.
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