Key Points
- MicroStrategy’s (MSTR) stock continues to dip, reflecting a strong correlation with Bitcoin’s price.
- The company’s Bitcoin holdings currently stand at over 214,246 coins, valued at over $13 billion.
MicroStrategy (MSTR) has seen a significant drop in its stock price, with weekly losses of over 19%. This comes just before the fourth halving of Bitcoin.
The stock hit a high of $1999.99 on March 27, but has since retraced, reversing some of its monthly gains. This marks a three-week-long pullback on the charts.
Bitcoin’s Impact on MSTR
MSTR, a company with a Bitcoin strategy, has a strong correlation with the cryptocurrency’s price. This correlation has been evident since mid-February.
This means that the drop in Bitcoin’s price has also impacted MSTR’s stock. Between March 27 and April 18, Bitcoin dropped by 13%, and MSTR’s stock fell by 40% during the same period.
At present, the bears seem to have more leverage, having pushed MSTR below the 10- and 20-day Simple Moving Average (SMA). If they continue to push, the next target is the 100-day SMA ($896), which could pull MSTR’s value below $1000.
MicroStrategy’s Bitcoin Holdings
MicroStrategy currently holds 214,246 Bitcoin coins, worth over $13 billion at current market prices. The majority of these holdings were acquired through company-issued convertible notes.
However, some market watchers believe that MSTR’s stock is overvalued. Kerrisdale Capital, a private investment manager, has stated that new Bitcoin ETFs offer alternatives to gain exposure to Bitcoin, negating any unique advantage MicroStrategy may have had.
According to Kerrisdale Capital, MSTR’s fair value is between $700 and $800. This upper estimate is close to the bearish target marked by the 100-day SMA.
However, this projection could be invalidated, particularly if there is a significant Bitcoin rally around the halving.
