- Summary:
- Despite primarily investing in Bitcoin, Microstrategy stock price has risen by more than 455% YTD, nearly four times Bitcoin's 117%.
MicroStrategy stock price continued with its ascent in the premarket session on Tuesday as investors weighed their next move following Monday’s rally that saw it gain 12.9 percent. It traded at $392.90 at the time of writing, up by 2.1 percent on the daily chart.
MicroStrategy’s risk/reward factor
The company’s fortunes have surged as a result of the current Bitcoin price rally , and it recently bought 51,780 BTC for $4.6 billion. MicroStrategy’s total Bitcoin holdings currently stand at 331,200 coins, acquired at an average price of $49,874. With Bitcoin price currently at $91,670, the company has made a substantial profit of more than $13.8 billion.
On the downside, however, MicroStrategy’s strategy of investing primarily in Bitcoin also carries the inflationary risks associated with the cryptocurrency. With Bitcoin having risen by more than 34 percent in the last month, it is probable that a correction could be around the corner.
Meanwhile, the company’s software business has largely taken a backseat, with its revenues of $100 million, which is negligible for a company with a market capitalisation of $77 billion.
That said, its business model seems to be working with great efficiency. In fact, while Bitcoin price is up by 117 year-to-date, MicroStrategy (NASDAQ: MSTR) stock price has gained 455 percent during the same period. This makes a strong case for investing in the company rather than buying Bitcoin directly.
MicroStrategy stock price prediction
The momentum on MicroStrategy stock price calls for further upside above 383.50 With the buyers in control, look for the first resistance at 399.55. However, a stronger bullish momentum could break above that mark and test 405.60.
On the other hand, a move below 383.50 will favour the sellers to be in control. With that, the first support could come at 372.70. However, if the bears extend their control, it could break below that level and test 364.35. Meanwhile, the upside narrative will be invalid at that point.
