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. The Strategy price 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 start when assets are overbought, while bull markets start when they are oversold. It is the same concept: Crypto bull runs start when the Crypto Fear and Greed Index moves into the extreme fear zone.
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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, the 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
Another notable catalyst for the MSTR share price is that Bitcoin (BTC) has also moved to an extreme oversold level, and analysts believe it will rebound. Additionally, the coin has entered a bear market numerous times since its launch in 2009.
One major catalyst for Bitcoin is its perception as a digital form of gold. It has a capped supply of 21 million coins, of which most have already 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 eventually replaces Jerome Powell. The latest media report indicates that Kevin Hassett, a major Trump ally, has emerged as the most likely candidate for Fed Chair.
Meanwhile, MSTR’s short interest has risen to nearly 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 chance the stock will go through a short squeeze as retail traders gang up on 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 firms such as Bernstein, Mizuho, BTIG, and Citi.
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