The MSTR stock price has remained under pressure in the past few months. It crashed below the psychological point at $200 for the first time since October this year. It is down by over 60% from its all-time high. So, is it safe to buy the oversold Strategy stock dip?
Why the MSTR Stock Price Has Crashed
The Strategy stock has been in a strong downtrend in the past few months. This decline is in line with that of other top Bitcoin treasury companies like Gemini, Bullish, Metaplanet, Semler Scientific, and KindlyMD..
One reason for this crash is that the treasury industry has become highly saturated. There are now over 170 companies with Bitcoin in their portfolios. As such, the company has largely lost the exclusivity it had a few months ago when it was the only game in town.
The other reason is that the company has gone through a valuation reset in the past few months. In the past, the company used to trade at a significant premium to its Bitcoin holdings. Indeed, some analysts recommended buying the MSTR stock instead of spot Bitcoin ETFs because of its premium.
READ MORE: Here’s why Gemini, Bullish, Circle Stocks Have Crashed After IPOs
As such, the MSTR stock crash is likely happening as investors reset it valuation. The company’s market NAV has now moved below 1 as its Bitcoin pile is valued at $60.6 billion compared to its market value of $57 billion. Also, the enterprise NAV has dropped to 1.194 and could move to below 1, as Metaplanet has done.
The falling Strategy mNAV multiple is risky because it will make it difficult to raise money. Based on its business model, the company relies on Bitcoin accumulation to boost its stock value.
The MSTR share has also plunged because of the ongoing Bitcoin price crash. BTC moved from a record high of $126,300 in October to the current $94,000.
Strategy Stock Price Technical Analysis
The daily timeframe chart reveals that the MicroStrategy stock price has been in a strong downtrend. It has now moved below the important support at $230, the lower side of the inverse cup-and-handle pattern.
MSTR share price has formed a death cross pattern as the 50-day moving average has moved below the 200-day MA. Additionally, the stock’s Relative Strength Index (RSI) and the Stochastic Oscillator have moved to the oversold.
The Average Directional Index (ADX) has moved to 40, a sign that it is gaining momentum. Therefore, the stock will likely continue falling in the near term. Based on its inverse C&H, there is a risk that it will drop to the key support at $100.
On the positive side, there is a likelihood that the MSTR share price will bounce back once Bitcoin starts rebounding.
READ MORE: Will Crypto Recover as Fear and Greed Index Nears Buy Zone?
