MicroStrategy (MSTR) stock extended its weekly decline to more than 19% just hours before Bitcoin’s (BTC) fourth halving. After hitting an all-time high of $1,999.99 on March 27, the stock rebounded, giving back some of its monthly gains. MSTR’s weekly loss marked a three-week long decline on the chart.
On a quarterly basis, the stock price fell 30% in the second quarter. On the contrary, year-to-date performance was +73.4% at the time of writing.
On April 17, MSTR closed at $1188.05. This is a significant discount for those who did not have access to the stock. Nevertheless, the macro situation and price charts showed that more attractive discounts are still achievable for those who decide to enter.
Will MSTR increase losses due to Bitcoin halving?
As one of the companies with a Bitcoin Strategy, MSTR stock has a high correlation with his BTC. This was evidenced by the positive correlation coefficient since mid-February.
This means that the long-term decline in BTC price has also affected MSTR stock.
Between March 27th and April 18th, his BTC on Bitstamp fell 13% from $71.7,000 to $62,400. During the same period, MSTR plummeted 40%. This is more than three times his BTC decline.
At the moment, the bears are gaining more influence after MSTR fell below its 10-day and 20-day SMAs (simple moving averages), marked in blue and orange, respectively.
If the bears continue to move higher, the next target will be the 100-day SMA ($896) and an attempt to push MSTR below $1,000. That could mean better discounts for bulls who missed out on previous promotions.
A below-average RSI (Relative Strength Index) indicates increasing selling pressure and supports expectations of a prolonged decline.
Bitcoin Halving and MSTR are “overvalued”
Additionally, Bitcoin Halving could encourage MSTR bears if selling pressure on Bitcoin increases around the event.
MicroStrategy’s current BTC holdings are 214,246 coins, worth over $13 billion based on current market prices. Most of these were acquired through convertible bonds issued by the company.
However, the continued decline also resonates with some market participants who believe MSTR stock is overvalued. Last month, private investment management firm Kerrisdale Capital made a similar report:
“We are long Bitcoin and short shares of MicroStrategy, a proxy for Bitcoin which trades at an unjustifiable premium to the digital asset that drives its value.”
Kerrisdale Capital argued that the new Spot BTC ETF provides an alternative means of exposure to BTC and negates the unique benefit to the premium charged by MicroStrategy.
For perspective, some investors previously preferred to buy his MSTR to get indirect exposure to his BTC.
Simply put, a private investment manager sees the fair value of his MSTR at $700 to $800. The upper estimate is close to the bearish target indicated by the 100-day SMA (yellow).
However, this prediction may be invalidated, although it is unlikely that Bitcoin will rally significantly, especially around the halving.
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