Taking stock of Microstrategy: Is now the time to sell?

Shares of MicroStrategy Incorporated (NASDAQ:MSTR) made fresh all-time highs on Monday as they surpassed the crucial short-term resistance near $1,800 level and ended the day up 21.86% at $1,856.

MicroStrategy has been aggressively buying Bitcoin over the past few weeks, raising billions of dollars through the issuance of convertible notes. On March 8, the company completed its offering of 0.625% convertible senior notes due 2030 for an aggregate principal amount of $800 million.

Following this, the company announced on March 13 that it intends to raise another $500 million through convertible senior notes due 2031 in a private offering. Nearly all of the proceeds being raised through these offerings are being used by the company to purchase additional Bitcoins.

MicroStrategy, which as of March 10 held 205,000 Bitcoin at an average purchase price of $33,706 per Bitcoin, revealed in a regulatory filing on March 19 that it has purchased an additional 9,245 Bitcoin at an average price of $67,382 per Bitcoin between March 11 and March 18. This fresh purchase has brought MSTR’s total holding to 214,246 Bitcoin, which at current prices are worth over $15 billion.

MicroStrategy’s stock has seen an unprecedented surge of 194% year-to-date, surpassing Bitcoin’s gains of nearly 60% by a wide margin. However, this dramatic upsurge has happened after a period of prolonged downtrend which has tested the patience of even the most determined bulls.

MSTR chart by TradingView
In early 2021, when Bitcoin prices first surged from under $10,000 to over $60,000, MSTR’s stock saw the first dramatic rise that took it beyond $1,300 from $150. However, it soon entered a period of gradual decline, losing close to 90% of its value in the next few quarters.

Following the decline, it remained within a range of between $200 to $400 for more than a year. The current bull run in MSTR stock started in October 2023 when Bitcoin price broke above $30,0000. MSTR’s stock followed suit, breaking out above $400 and reaching its current high of above $1,850.

However, this ascent has been quite volatile and the question lingering on investors’ minds is: can it sustain at the current level and go beyond?

Examining the long-term chart of MSTR reveals a resilient bullish trend, marked by occasional pullbacks. Despite significant drops of 40% and 30% in short periods, the stock consistently rebounds, hinting at sustained growth.

With both long-term and short-term indicators favoring upward momentum, betting against the stock now would be ill-advised. Bears should monitor Bitcoin’s price, as any sharp reversal could signal an impending exit for MSTR bulls.

MSTR chart by TradingView

For seasoned bulls, volatility shouldn’t be alarming, but newcomers should cautiously size their positions to weather potential downturns of 20-30%.

As long as MSTR maintains above its 50-hour Donchian Channel, the short-term bullish trend is likely to persist, with $2,180 emerging as the next resistance level—a 161.8% retracement from its recent low at $1,230.44.

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