MSTR Stock Price Forecast as Strategy’s Dilution Continues, Establishes $5.1B Reserves

MSTR stock jumped on Monday as Bitcoin approached the important resistance level of $80,000 and as its dilution gained momentum. Strategy soared to $119.25, its highest level since June 17 this year.

MSTR Stock Jumps as Bitcoin Price Nears $80k

Strategy and other Bitcoin treasury companies are benefiting from the ongoing Bitcoin rebound. It has jumped from the year-to-date low of $57,660 to a high of $79,475. If this rally continues, the coin will likely surge above the key resistance level of $80,000, opening the door to further gains.

Fundamentals are also bullish. For example, the US public debt jumped to $40 trillion last week and has already soared by over $67 billion since then. This is a bullish sign for Bitcoin because of its strong tokenomics, including the 21 million supply cap.

Bitcoin is also seeing strong demand from institutional investors. Spot Bitcoin ETFs added over $2.3 billion in assets last week, the biggest weekly increase this year. The increase was higher than the $172 million it added in the previous week.

Bitcoin has some strong technicals. It has already jumped above the 50-day and 200-day moving averages. Notably, it is forming a bullish flag, a common continuation pattern in technical analysis. That is a sign that bulls remain in control for now.

These moves will benefit Strategy, the biggest Bitcoin holder in the world. It now holds 840,447 coins worth over $66 billion. At its lowest level this year, these coins were worth over $48 billion, meaning that it has already gained $18 billion in value. Also, with Bitcoin above $75,385 – its average BTC buying price – it means that its accumulation has become profitable.

Strategy Dilution Continues

The main risk that MSTR stock faces is that it has become one of the top diluters in the US. It has diluted these investors by using the funds to accumulate Bitcoin. In this, it has hiked the number of outstanding shares from below 70 million a few years ago to over 300 million today.

The company diluted its shareholders by selling over 18.2 million shares worth over $2 billion last week. It used these funds to boost its cash reserves to $5.1 billion, a move that allows it to have enough liquidity to pay dividends and repurchase its STRC shares.

In the statement, the company said that it had established a new $1.59 billion cash reserve, which it hopes will enhance the Digital Credit Capital Framework. In all these, it means that MSTR shareholders will continue to see more dilution and will likely not benefit from holding the stock.

Strategy has changed its business model in the past few months. It has stopped buying more Bitcoin and has abandoned its plan to never sell. In this, it has made several sales in a bid to boost its preferred stocks.

MSTR Stock Price Technical Analysis

The daily chart shows that the Strategy shares have rebounded in the past few days. It has now moved above the upper side of the ascending channel, which was part of a bearish flag pattern.

The stock has also moved above the important resistance level of $112.87, its lowest swing in April and June this year. Additionally, it has jumped above the 50-day Exponential Moving Average (EMA).

Therefore, the stock is likely to see a bullish breakout, potentially reaching the key resistance level of $150. This view will be confirmed if Bitcoin continues its strong bull run.