2 reasons MSTR stock fell as Bitcoin price rallied
Release: 2024/12/07 02:04 Reading: 517
MicroStrategy Stock Declines Despite Bitcoin Bull Run
Despite Bitcoin's recent record highs, MicroStrategy's (MSTR) stock has experienced a 27% decline from its yearly peak. On December 6th, MSTR shares were trading at $390, a downward trend that began on November 21st.
While the pullback remains significant, MicroStrategy remains a top performer this year, with an impressive 500% growth and a market capitalization exceeding $91 billion. The company also holds the distinction of being the top gainer in the Russell 2000 index.
Two factors have likely contributed to the stock's recent retreat. Firstly, profit-taking by investors has played a role following MicroStrategy's strong ascent. Secondly, concerns have arisen over the company's $91 billion valuation, which appears excessive considering its Bitcoin holdings are valued at approximately $40 billion. This has led to a $50 billion gap that the struggling data analytics business currently cannot fill.
Wall Street analysts, however, maintain optimism about MicroStrategy's stock, with estimates pointing to a potential upside. The average stock estimate currently stands at $492, surpassing the current $390 price point.
The performance of other Bitcoin-exposed companies, such as Marathon Digital, Coinbase, Riot Platforms, and Hut 8 Mining, has mirrored MicroStrategy's stock trend, indicating a potential correlation with the broader Bitcoin market.
Future Outlook
MSTR stock has maintained support levels, including the ascending trendline, 50-day, and 100-day moving averages. It has also found support at a key pivot point. This suggests potential for a rebound if Bitcoin continues its upward trajectory.
A continued rise could see MSTR shares reach their all-time high of $540. A break above this level could lead to further gains, potentially targeting the $625 overshoot level.
Conversely, a drop below the rising trendline could trigger a mean reversal, pushing the stock towards the 100-day moving average at $240, which coincides with a significant Murrey Math Lines support level.
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