MicroStrategy (MSTR) Stock Soars to New Record High as Bitcoin (BTC) Holdings Surpass 331K

MicroStrategy (MSTR) shares could remain in focus on Tuesday after soaring to a new record high following news the software analytics company had purchased an additional $4.6 billion of Bitcoin (BTC).

MicroStrategy (MSTR) shares could remain in focus on Tuesday after hitting a new record high amid news the software analytics company had purchased an additional $4.6 billion of Bitcoin (BTC).

The company bought 51,780 bitcoins for approximately $4.6 billion in cash, at an average price of approximately $88,627 per bitcoin, taking its total stash in the pioneer cryptocurrency to 331,200 BTC, according to a U.S. Securities and Exchange Commission (SEC) filing.

MicroStrategy, whose BTC holdings tally roughly $30 billion at current prices, started acquiring Bitcoin in August 2020 to hedge against inflation and diversify its corporate treasury. MicroStrategy shares have surged nearly sixfold since the start of the year through Monday’s close, significantly outpacing Bitcoin’s year to date (YTD) return of around 115%.

The company's stock gained 13% Monday, closing at $384.79.

Below, we break down the technicals on MicroStrategy’s weekly chart and point out key price levels to watch out for.

Volume Backs Strong Price Momentum

MicroStrategy shares have remained in a steady uptrend since the 50-week moving average (MA) crossed above the 200-week MA in late January to form a bullish golden cross signal.

More recently, gains have accelerated after the stock broke out above a rectangle formation last month. Importantly, robust trading volumes have backed the move higher, with the shares last week registering their highest turnover since MicroStrategy went public in 1998.

The relative strength index (RSI) confirms bullish price momentum with a reading above the 80 threshold, but also flags overbought conditions that could trigger near-term retracements.

Let’s apply technical analysis to MicroStrategy’s chart to project an upside price target and identify important support levels.

Bars Pattern Price Target

Investors can project an upside price target using a bars pattern, a chart technique that analyzes prior trends to predict potential future moves.

When applying this tool to MicroStrategy’s chart, we take the stock’s trend higher from October 2023 to March this year and reposition it from the rectangle formation's lower trendline. This forecasts a price target in the neighborhood of $525, about 36% above Monday’s close.

We selected this prior trend as it captures the broad move higher that preceded the rectangle formation and assumes a continuation of the stock’s longer-term uptrend.

Important Support Levels to Watch

If profit-taking ensues, shares could initially revisit the $180 level, an area on the chart where investors may look for buying opportunities near the rectangle formation's top trendline.

Selling below this key level may act as a catalyst for a steeper sell-off to around $115. This region on the chart would likely encounter support near the prominent February 2021 peak and rectangle pattern’s lower trendline.

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As of the date this article was written, the author does not own any of the above securities.