Why MSTR Stock May Jump 25% In October Amid Bitcoin Surge?

The MSTR stock price has crashed in a deep bear market, plunging by over 23% from its highest level this year.

This plunge has mirrored the performance of other top companies in the Bitcoin treasury industry. Still, the Strategy stock has numerous catalysts that may push it much higher in October.

MSTR Stock Price to Benefit as Bitcoin Has Formed a Bullish Flag Pattern

Bitcoin has formed multiple bullish patterns, signaling a potential rebound ahead. This could drive MSTR stock sharply higher in October. The most crucial pattern it has formed is the bullish flag, which resembles a hoisted flag.

This pattern consists of a vertical line and a descending channel, which form part of the flag section. Bitcoin has just moved above the upper side of this flag, and a strong bullish breakout seems highly likely.

Such a bullish breakout could push the coin to its all-time high of $124,300. A move above that level indicates further gains. It could reach the extreme overshoot level of the Murrey Math Lines tool at $131,250.

Strategy stock would benefit greatly if the Bitcoin price were to jump. For example, it now holds 640,031 coins, currently valued at over $76 Billion. A move to $131,250 for Bitcoin would bring its holdings to over $84 Billion.

MSTR Stock Has Formed a Bullish Pattern

Meanwhile, the MSTR stock price has formed a highly bullish chart pattern, indicating further gains in the coming weeks. In September, the stock reached a low of $296. This shows an oversold level, as noted in the Murrey Math Lines tool.

It then began a steady rebound. The price has now climbed to $338 on the daily chart. It is common for a stock or any other asset to rebound after it has moved to an oversold level.

A closer look also reveals that the stock has formed a falling wedge pattern. It is composed of two descending and converging trendlines.

In most cases, this pattern typically leads to a strong rebound, especially when the two lines are about to converge. Indeed, Strategy stock has now moved above the upper side of the wedge, indicating further gains in the near term.

Another positive catalyst for the stock is that the RSI has surpassed the neutral point of 50 and is trending upward. Therefore, the MSTR stock price may continue to rise as bulls target the ultimate resistance level at $437. It is approximately 25% above the current level.

Strategy Short Interest is Falling

Short-sellers are reducing their positions in Strategy stock this year. This shift comes even after the stock’s recent decline. It signals growing optimism and potential upside ahead.

Data compiled by MarketBeat shows that the company has a short interest of 7.47%. With this, over 21.17 million shares are short.

The number of shares sold short stood at over 28.5 million in March of this year and has been declining since then. This could be a sign that short-sellers have begun to cover their positions, anticipating a stock rebound.

Still, while the short interest has dropped, it remains much higher than that of other American companies. MSTR stock could be primed for a short squeeze as bearish positions unwind. The ongoing bull run in both stock and crypto markets adds fuel to the upside potential.

Another potential catalyst is that the company has become more affordable in the past few months. The spread between its market cap and its valuation is wide. However, the NAV multiple is now hovering near the lowest level this year.

This means that the stock may rebound in the coming months as investors buy the dip. The only significant risk is if investors continue to dump Bitcoin treasury stocks, as they have done in the past few months.