#StrategyBuyback

📉 Strategys $2 billion buyback rally only lasted one day. Now MSTR is back near its 52-week lows and the market is trying to tell us something.

I want to give you a look at what happened with Strategy this week. If we look at the two days we can see a complete picture than just the surge on Monday or the drop on Tuesday.

On Monday Strategy said it would buy back $2 billion of its stock using Bitcoin. MSTR stock went up 12.6%. People thought this was a thing because it made the companys balance sheet stronger and it showed that the management is confident and has a plan. It was a relief for the investors.

On Tuesday Bitcoins price went below $59,000. MSTR stock went down 7.3% to $85.90. It is very close to its 52-week low of $81.81. The stock gave back all of its gains from Monday in one day.

What does this two-day period really tell us? The buyback announcement was a thing. It makes sense to buy back stock when it is trading below the value of its Bitcoin assets.. The fact that the market gave back all the gains when Bitcoin went below $59,000 shows us what is really driving MSTRs price. It is not the buyback. It is Bitcoin.

I am not saying that Strategys management made a decision. I am just saying that MSTR is closely tied to Bitcoin and when Bitcoin goes down MSTR goes down harder. At $85.90 with a 52-week low of $81.81 below it the situation is not good. If MSTR stock breaks below $81.81 it could trigger selling from investors who were hoping the buyback would stop the stock from falling.

There is also the issue of the dividend. STRC stock hit an all-time low near $74 week. The $2 billion buyback was meant to help with this situation. It has helped a bit.. With a lot of debt to pay and not much cash the situation is still tight if Bitcoin stays below $60,000 for too long.

For things to get better one of two things needs to happen. Either Bitcoin needs to find support above $58,000 and start going up which would make the buyback look like a good idea.. Strategy needs to announce more changes, to its capital structure like new financing or more buybacks to show that it is actively managing the situation.

If Bitcoin breaks below $58,000 MSTRs 52-week low could. The risk of a bigger drop becomes more real.

Monday was a relief. Tuesday was reality. We need to watch $81.81

With MSTR near its 52-week low at $85.90 after giving back all the buyback rally do you think the $81.81 support will hold as Bitcoin tests $58,000-$59,000 or does Strategy need another big announcement to prevent a new 52-week low?

‍#GateSquare #BITCOIN: @Gate_Square$BTC