MSTR stock price at risk as Strategy flashes a death cross

The MSTR stock price continued its strong downward trend today, Oct. 17, as Bitcoin and other cryptocurrencies plummeted.

Summary

• MSTR stock price has flashed a death cross pattern on the daily chart.
• Technical analysis points to more downside to $230 and below.
• Strategy will struggle as Bitcoin price plunges.

Strategy, the biggest Bitcoin (BTC) treasury company, dropped to a low of $280, its lowest level since April 15 and 40% below its highest point this year. 

MSTR stock price forms a death cross pattern 

The daily chart shows that the MSTR share price has plunged in the past few months as it decoupled from Bitcoin. It remained in a bear market even as Bitcoin jumped to a record high earlier this month.

The Strategy stock price will likely continue to fall further now that it has moved below the crucial support level at $292, where it was forming a double-bottom pattern.

MSTR share price has also formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages have crossed each other. This pattern is one of the most bearish signs in technical analysis.

Oscillators are supportive of more downside, with most of them, including the Relative Strength Index (RSI) and the MACD pointing downward. The Average Directional Index has risen to 20, a sign that the trend is strengthening.

Therefore, the stock will likely continue falling, with the next key target at $230, the lowest level in May this year. A drop below that level will point to more downside, potentially to $200.

Bitcoin price crash to accelerate Strategy’s downtrend 

The MSTR stock price will likely continue falling now that Bitcoin is in a bear market. This is notable because Strategy is the biggest Bitcoin holder with 640,250 coins worth over $67 billion.

Technical analysis suggests that Bitcoin’s price has more downside. It has formed a double-top pattern on the daily chart and a giant rising wedge on the weekly chart. These patterns mean it may drop below $100,000 as risks in the market rise.

Additionally, MSTR stock could crash as its net asset value continues falling, which will make it hard to raise capital by selling preferred shares. Its basic mNAV metric has dropped from 3.3 in November to 1.195, while the enterprise value multiple has dropped to 1.4.

Many Bitcoin treasury companies have already seen their premiums drop, with Metaplanet’s NAV falling below 1. MicroCloud Hologram, KindlyMD, and Semler Scientific have also seen their NAV multiples plunge below 1.