MSTR’s Bitcoin Blunder: Will the Stock Plunge Further?

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Egad, what a to-do! The MicroStrategy stock, that intrepid fellow, stumbled out of the post-President’s Day festivities looking rather worse for wear. MSTR, poor chap, closed nearly 4% lower than its Feb. 13 soiree, despite what one might call a spot of positive corporate chinwag. Selling pressure, you see, is a persistent blighter.

And all this hullabaloo comes after Strategy (formerly MicroStrategy, but let’s not split hairs) went and added more Bitcoin to its collection, lowering its average purchase cost. One might think this would be cause for celebration, but the charts, those wretchedly honest things, suggest this latest BTC average drop is about as useful as a chocolate teapot. A far more sinister downside risk lurks beneath the surface, like a crocodile in a country house pond.

MicroStrategy’s Bitcoin Buy: A Mere Drop in the Ocean

Old MicroStrategy, bless its heart, recently snapped up 2,486 Bitcoin at an average price of $67,710. This little spree bumped its total holdings from 714,644 BTC to 717,131 BTC. Quite the hoard, what?

Now, because this purchase was made below its previous average cost, it did indeed lower the company’s overall Bitcoin cost basis. The average acquisition price dropped from $76,052 to $76,027-a reduction of $25. One can almost hear the champagne corks popping, but let’s not get ahead of ourselves. This is about as significant as a flea’s sneeze in a hurricane.

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While this technically spruces up MicroStrategy’s balance sheet, the impact is about as substantial as a ghost at a séance. The company still holds Bitcoin at an average cost above $76,000, which is rather steeper than many earlier cycle acquisitions. And, more to the point, the bigwig investors are about as impressed as a cat at a dog show.

Capital Flow: The Investors’ Cold Shoulder

One rather telling indicator of investor sentiment is the Chaikin Money Flow, or CMF. This clever little metric measures whether the big cheeses are shoveling money into a stock or pulling it out, by combining price and volume data. When CMF stays above zero, it’s all jolly good; when it dips toward zero or below, it’s as cheerful as a wet weekend.

Strategy’s CMF has been trending lower, like a deflating balloon at a child’s party, and is now teetering on the brink of zero. It’s also approaching a critical ascending trendline support, which is about as reassuring as a tightrope walker without a net. Despite the latest Bitcoin purchase, the big money isn’t exactly rushing in. Capital inflows remain as weak as a cup of tea without milk.

This lack of enthusiasm becomes even more alarming when paired with weakening momentum signals. It’s enough to make one reach for the smelling salts.

Hidden Bearish Divergence: The Writing on the Wall

Momentum analysis, courtesy of the Relative Strength Index (RSI), reveals a hidden bearish divergence forming. RSI, for those not in the know, measures buying and selling strength on a scale from 0 to 100, and is jolly useful for spotting weakening trends.

Between Dec. 9 and Feb. 13, MicroStrategy’s stock price formed a lower high, meaning it failed to reach its previous peak. Meanwhile, the RSI formed a higher high. This, my dear reader, is the financial equivalent of a red flag at a bullfight. It signals that sellers remain firmly in the saddle, and the downtrend is likely to continue. The MSTR stock price is down over 60% on a 6-month timeframe, which rather drives the point home.

This same signal appeared earlier between Dec. 9 and Jan. 14. After that divergence formed, MicroStrategy stock took a nosedive of more than 45%, landing near $104. The appearance of a similar structure now suggests another correction could be on the cards if selling pressure persists. But this time, the consequences could be equally dire.

Bear Flag Structure: A Storm on the Horizon

MicroStrategy’s price structure now resembles a bear flag pattern, a bearish continuation pattern where the price temporarily rallies before resuming its downward march. After falling sharply earlier this February, MSTR stock rebounded, but this rebound has remained within a rising channel-the flag portion of the pattern.

The stock is currently trading near $128, perilously close to the lower boundary of this structure. If the price breaks below the $124 support level, the bear flag breakdown could commence.

Based on the height of the previous decline, this breakdown could send MicroStrategy stock tumbling toward $71, provided support levels at $104 and $86 give way. This would represent a decline of more than 40% from current levels. Enough to make even the stoutest investor break into a cold sweat.

Recovery, of course, remains possible if buyers regain control. A move above $139 would weaken the bearish outlook, while a full recovery above $155 would invalidate the bearish structure entirely. One can but hope.

However, the bearish setup could also fizzle out without a sharp breakout. If the price continues rising slowly and the current channel extends beyond half of the original pole’s height, the bear flag would lose its validity. In that case, the structure would shift from a bearish continuation pattern into a broader recovery channel, reducing the immediate downside risk. But let’s not count our chickens just yet.

For now, MicroStrategy has managed to lower its Bitcoin cost basis slightly, but capital flow weakness, bearish divergence, and a fragile price structure all suggest that this small improvement may not be enough to stave off a larger stock correction. It’s enough to make one long for a nice, stiff drink.

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2026-02-18 21:26