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- 1 MSTR stock price rose by 2.62% intraday, a few days after a surprising earnings report.
- 2 Despite Q1 revenue, Micheal Saylor and his company are haunted by outstanding debt.
- 3 The bullish momentum can break if the company calls mayday.
Microstrategy Inc. is overburdened by the outstanding debt obligation, which Micheal Saylor and his company used to buy bitcoin. The co-founder of the company seems to be in a very tight spot as the outstanding debt worth $2.1 billion haunts them. The latest released earnings for the first quarter may not be enough to pay the obligated amount, which can induce forced BTC dumping or MSTR shares. The other available option includes obtaining more debt against bitcoin as collateral, which can push the company towards the domino effect.
Behind the Facade
As per a previous statement given by Micheal Saylor, the company would prioritize selling bitcoin in times of crisis. According to reports, MicroStrategy Inc. currently holds 140,000 BTC at present. The whale started to accumulate bitcoin in late 2020, and may have boosted the price of bitcoin. The company’s financial activities narrates a horrific tale where the foundation seems to fall apart.
MicroStrategy Inc. allegedly used $2.1 billion debt to purchase bitcoin. This year alone, the company bought 7,500 BTC and is listed among the top bitcoin holder companies. On the other shore, MicroStrategy Inc. has sold 1,348,855 MSTR shares for a total of $339 million. The debt company is obliged to, is a mixture for loans and convertibles & secured notes.
The company states to have enough cash to survive for the next 12 months, with a war chest of around $94 million in cash. The prospect of MicroStrategy Inc. dumping BTC to cover debt would highlight the weakness of the biggest bitcoin bull.
MSTR Stock Price Analysis
MSTR stock price forms a rising trend with higher lows. The positive earnings report tried to establish a bullish trend and induce buying sentiment among the buyers. The trading volume highlights gradually increasing buyers. The recent price breached the EMA ribbon, marking a bullish swing. MSTR stock can witness a drop, if the company opts to sell MSTR shares to pay off debt. In case of BTC dump, the prices may face backlash to influence the bitcoin prices.
The Bollinger Bands contract to reflect the sideways and range-bound movement in MSTR stock price. The RSI notes an uptick suggesting a slightest rise in buyer interest. The MACD approaches a convergence, and may turn bullish for a brief duration. The seller interaction recorded also declines, marking a drained selling pressure.
Conclusion
MicroStrategy Inc. is under a debt crisis and has a short duration of a year to initial survival strategy. The debt obligation can be paid off by either BTC dump or MSTR share sell off. In both cases, the company can enter a bearish trend, and display signs of collapse. The MSTR stock price can reverse after being rejected at $355.00 and test supports at lower price ranges.
Technical levels
Support levels: $225.55 and $133.05
Resistance levels: $355.00 and $393.40
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
