Strategy stock could rise 50% due to rare pattern: impact on Bitcoin?

Shares of Strategy (MSTR), the largest publicly traded holder of Bitcoin (BTC), are showing a technical pattern that could indicate an impending recovery. The formation of a very rare pattern on the daily chart suggests that the long-term decline is losing momentum. This would be great news for investors. The MSTR share has lost more than half of its value this year. But what is the impact on Bitcoin?

Technical signals indicate recovery

The rare ‘Abandoned Baby’ pattern consists of three candles: a large red candle, a small candle with a downward gap, followed by a green candle that opens with an upward gap. This leaves the middle candle visually ‘abandoned’.

And this is exactly the pattern that is now forming on the daily chart of MSTR. Analyst The Bitcoin Therapist calls the pattern “the market’s version of a unicorn” and considers it a powerful bottom signal.

After falling about 66 percent from its previous peak this year, MSTR bottomed out around $155.61 on Monday. Since then, the share has risen by more than 22 percent. This increase coincides with a recovery in the Bitcoin price in recent days.

Impact on company’s bitcoin strategy

But what next for MSTR? Technical analysts note additional indications of recovery. For example, options trader Brando sees room for a further increase towards $200, and possibly even $280 if positive market sentiment continues:

“Strategy has finally reached a level where the risk-return is starting to tilt in favor of buyers.”

A price increase towards these levels would strengthen the company’s internal Bitcoin strategy. Recently, Strategy’s total market capitalization fell below the level of the value of its own BTC holdings. This was indicative of the declining confidence in the share. For example, traders were concerned about a possible scenario where Strategy had to sell Bitcoin to cover costs.

Should Strategy Sell BTC?

CEO Phong Le recently indicated that Bitcoin would only be sold if the mNAV (market value net asset value) fell below 1, i.e. if the value of the company is less than the value of all Bitcoins, and no capital is available. A recovery in the share price reduces that chance and strengthens the company’s balance sheet position. It could lay the foundation for new purchases, which is of course positive for the Bitcoin price.

Fortunately, Strategy also has enough capital available. For example, we wrote on Monday that the company has set up a financial buffer of $1.44 billion to cover debt and dividend payments in the coming months.

Nevertheless, risks remain. Strategy’s share is inherently linked to the price of Bitcoin. In the event of disappointing inflows into Bitcoin ETFs or the absence of monetary easing, the BTC price could come under pressure again, which would also affect MSTR.