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Key Insights :
- MSTR stock price is primed for a strong surge after flipping a key level.
- Technical and fundamental analysis point to more BTC gains.
- The 120% yielding MSTY ETF consistently underperforms MSTR regarding total returns.
This week, the MSTR stock price made a strong bullish breakout as Bitcoin surged to a record high. Strategy shares may continue soaring if BTC gains momentum, as technicals and most analysts expect. So, is the 120% yielding MSTY ETF better if BTC and MSTR stocks surge?
MSTR Stock Price is On the Verge of a 20% Surge
Technical analysis points to more MSTR stock surge after it flipped a crucial resistance level into support. The daily chart shows that the coin soared above the key level of $429 this week.
This was significant because it coincided with the highest point on May 9. It was the upper side of the double-top pattern whose neckline was at $361. A double-top is one of the most popular bearish patterns in technical analysis.
It was also the neckline of the inverse head-and-shoulders pattern, a common bullish reversal sign. Therefore, moving above this level invalidated the bearish double-top outlook. This confirmed the bullish outlook of the inverse H&S pattern.
The 50-day and 100-day moving averages support MSTR stock. On the other hand, top oscillators like the MACD and the Relative Strength Index (RSI) point upwards. Soaring oscillators are a sign that the coin is gaining momentum.
Therefore, if this happens, the next key level to watch will be at $540, its highest point in November last year. This target price is about 20% above the current level.
Bitcoin Price to Be the Main Catalyst for Strategy Stock Surge
The primary catalyst for the Strategy stock jump is Bitcoin’s performance. Technical and fundamental analysis points to more Bitcoin gains in the coming months.
First, Bitcoin Treasury companies like Strategy, GameStop, MetaPlanet, Semler Scientific, and The Blockchain Group have continued to accumulate. This is leading to more demand.
Second, Bitcoin ETF inflows have continued soaring, and have already crossed the significant milestone of $54 Billion. Also, some countries will likely start buying Bitcoin over time.
At the same time, Bitcoin’s supply continues to dwindle, with those held by exchanges, miners, and over-the-counter exchanges falling. Technicals suggest that Bitcoin’s price will jump to $150,000. It has formed a bullish flag and a cup-and-handle pattern.
MSTR vs MSTY ETF: Better Buy?
A strong Bitcoin price surge will benefit MSTR stock and that of the Yieldmax MSTR Option Income Strategy ETF (MSTY). MSTY is a covered call ETF that enables investors to benefit from the Bitcoin and MSTR stock prices.
At the same time, this gives investors monthly dividends. This is notable because Strategy does not pay investors dividends. It uses a strategy known as covered calls.
In it, the fund manager invests in a Strategy stock. After this, it writes call options on it, taking a premium, which it pays investors as dividends.
A call option gives an investor the right, but not the obligation, to buy an asset. This right must be exercised before the option’s expiry date. The main risk for the MSTY ETF is when the underlying asset jumps sharply. In this case, it benefits until the strike price is reached.
Therefore, while the MSTY ETF has a dividend yield of 120%, it has consistently underperformed MSTR stock in total return. The chart shows that its total return in the last 12 months was 125%, while the MSTY gained 173%.
Based on its strong fundamentals and technicals, the Bitcoin price will likely do well in the next few years. If this happens, Strategy shares will rally as well. Historically, they often do better than BTC.
While MSTY ETF has high dividends, history shows that covered call ETFs underperform their underlying asset. For example, the JEPQ ETF always lags behind the Nasdaq 100 regarding total returns.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
