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Strategy’s MSTR stock recorded a 1.7% relief rally on Monday, the 3rd of August, after the world’s largest Bitcoin treasury firm sold another $104M $BTC.
The firm reported that it sold 1,638 $BTC (worth $104.73M). The sale was directed to fund its dividend obligations and deepen its repurchase program for its preferred stock, Stretch [STRC]. It also sold $290M worth of its MSTR stock (over 3M shares).
About $250M of the MSTR sale proceeds were used to increase its USD reserve to $4B. The remainder was allocated to the USD reserve and the firm’s cash balance.
As with the last $216M $BTC sale, the market faded the move, and $BTC jumped slightly higher. In response, MSTR saw a relief bounce and closed the market at $94.86 on Monday.
Can MSTR stock front a 2x rally?
Overall, Strategy has sold only $320M $BTC, which is still less than its $5B target, according to its new $BTC monetization plan. This is just 6.5% of its planned $BTC sale.
Whether MSTR stock will always recover with each sale remains to be seen. However, on the price chart, the stock was below key moving averages. In fact, it has been consolidating below its 2024 price range of $100-$180.
Reclaiming the price range would increase the recovery odds towards the upper bounds and the 200-day moving average at $160. If that bullish scenario plays out, the stock could post an extra 100% rally or 2x move from its current $94.
In fact, analysts, led by Barclays and Cantor Fitzgerald, expect the stock to surpass $180 and hit +$240.
That said, long-time Bitcoin critic Peter Schiff slammed Michael Saylor for the continued dilution of MSTR shares and the $BTC sales.
According to him, Saylor’s focus on saving STRC and bringing it to a $100 target was now a burden (‘albatross’) to both MSTR and $BTC.
For his part, Strategy CEO Phong Le maintained that MSTR’s amplified $BTC exposure has not changed despite their sales plan.
$MSTR is built to outperform Bitcoin over time. It has outperformed Bitcoin in every four-year holding period since we adopted Bitcoin on August 10, 2020. Outperformance comes from growing Bitcoin per share.
That said, the crypto market is expected to bottom in Q3 or Q4. Whether Strategy’s sell-off, CLARITY Act stalling, or extended geopolitical tensions will affect this timeline remains to be seen.
Final Summary
- MSTR stock saw a relief bounce after another $104M $BTC sale by Strategy
- Despite the stock struggling below $100, analysts foresee 2X-3X potential upside