MicroStrategy (MSTR) stock price got supercharged this week as Bitcoin continued firing on all cylinders. It soared to $871 on Tuesday, its highest level since November 2021. It has jumped by more than 573% from its lowest point in 2023, making it one of the best assets in Wall Street.
Bitcoin price soaring
While MicroStrategy is a software company, it has now become primarily a Bitcoin firm, thanks to the vast amount of coins in its portfolio. In its most recent filing, the company said that it held 190,000 Bitcoins in its balance sheet.
At the current price, these coins are valued at over $10.8 billion, higher than the $8.1 billion it had when the company released its results. This is a substantial amount considering that MicroStrategy is worth about $14 billion.
MicroStrategy is still buying more Bitcoins. It acquired 56,650 coins and it has already bought over 900 coins this year. This huge Bitcoin hoard has seen some investors buy MSTR stock instead of one of the popular spot Bitcoin ETFs. Besides, unlike these funds, MicroStrategy does not charge a fee to holders.
MSTR stock price surged as investors reacted to the ongoing Bitcoin performance. Bitcoin has soared to over $57,000, which is substantially higher than its post-FTX collapse low of $15,600. This is important because MicroStrategy was buying Bitcoin even when it was at these lows. This approach is known as the dollar cost averaging (DCA).
Looking ahead, the next price action for the stock will depend on how Bitcoin trades. I believe that Bitcoin has more room to run because of three main tailwinds. First, investors are moving to Bitcoin ETFs. The iShares Bitcoin ETF has now added almost $2 billion in inflows this week, bringing the total to $8 billion.
Second, the other tailwind is that Bitcoin halving is set to happen in April. In all the past halving events, Bitcoin tends to do well before it happens. This halving is important because it happens at a time when there is strong demand for Bitcoin.
Third, the Federal Reserve is expected to cut rates this year now that the economy is slowing. Data released on Tuesday revealed that durable goods orders and consumer confidence dropped sharply in January and February, respectively.
From a technical perspective, Bitcoin has already crossed the key resistance at $56,000. This means that bulls have an incentive to at least retest its all-time high of $69,000.
MSTR stock price forecast
Turning to the weekly chart, we see that the MSTR share price has jumped from its 2022 low of $131.9 to almost $900 today. Along the way, the stock has formed what looks like a cup and handle pattern, which is a popular continuation sign. It has also jumped above the 50-week and 25-week moving averages while the PPO indicator has remained above the neutral point.
Therefore, the path of the least resistance for the stock is higher, meaning that it could jump to the psychological point at $1,000. This target is about 15% above the current level. A break above that level will see it rise to its all-time high of $1,312, which is almost 50% above the current point.
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