The MSTR stock price has crashed in the past few months, moving from a high of $456 in July to $335 today. It has plunged by nearly 40% from its highest level in 2024, and is hovering at its lowest level since April this year. So, why is the Strategy share price plunging, and will it rebound?
MSTR Stock Price Crashes as Industry Sentiment Shifts
Strategy, formerly known as MicroStrategy, is one of the top American companies with a valuation of over $96 billion. The company has pivoted from being an enterprise software entity into a Bitcoin accumulator and now owns over 636,000 coins.
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Historically, the MSTR stock price used to provide a leveraged exposure to Bitcoin. In most cases, it jumped by a higher margin compared to Bitcoin as it was seen as a better bet than the coin.
Recently, however, this has changed as Strategy stock has plunged despite Bitcoin remaining stable above the psychological point at $100,000.
The ongoing performance is that, while its short interest has dropped, it remains above 8%. This means that many investors remain short the company, a sign that they expect the price to continue falling.
MSTR stock has plunged as more struggling companies have embraced the approach. There are now over 100 publicly-traded companies holding over 1 million coins. This means that investors now have a choice when looking for a Bitcoin proxy.
Further, there is a view that MSTR stock is highly overvalued, as this sum of parts calculation showed. This valuation looked at its Bitcoin holdings, its technology company value, its debt, and the cash on its balance sheet.
A basic valuation reveals that the company has a market capitalization of $96 billion and Bitcoin holdings of $70 billion, resulting in a $26 billion gap.
So, is this the end of the MSTR stock pullback? Chances are that the stock will rebound later this year when Bitcoin bounces back and possibly retests its all-time high.
Strategy Stock Price Technical Analysis
The MSTR share price has been in a strong downtrend in the past few months, mirroring the performance of other similar companies like Metaplanet and Microcloud Hologram.
It is about to form a death cross pattern as the 50-day and 200-day weighted moving averages approach their crossover. Also, the Relative Strength Index (RSI) and the MACD have continued falling.
Therefore, the stock will likely continue falling as sellers target the next key support at $300. A drop below that support will point to more downside.
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