Strategy Stock Plunges Despite Additional Bitcoin Purchase, Warning of Further 45% Drop

▲ Strategy, Bitcoin (BTC), decline/ChatGPT-generated image

Recently, Strategy (MSTR) moved to acquire additional Bitcoin (BTC). However, as its stock failed to hold the lower support line of a bear flag pattern and broke down, pessimistic outlooks are spreading that it could fall further to the $70 level.

On February 26 (local time), BeInCrypto reported, “Strategy’s stock price is falling more steeply than the rise in its asset value, showing signs of a serious structural breakdown.” On February 23, Strategy invested about $40 million to purchase an additional 592 BTC, increasing its total holdings to 717,722 BTC, but the market appears to be focusing instead on the stock’s decline. The company’s overall average purchase price for Bitcoin is calculated at $76,020.

The Chaikin Money Flow indicator, which reflects capital flows from institutional investors, remains near the zero line, suggesting that large capital is considering observing or exiting rather than accumulating. In particular, the indicator weakened sharply right after Strategy announced its additional Bitcoin purchase, supporting the view that institutional confidence in the stock is not as strong as before. In the past, institutions quietly accumulated shares during price drops and led rebounds of around 33%, but such buying activity is not currently being observed.

Technical analysis shows a bearish divergence in the Relative Strength Index (RSI), signaling a clear precursor to further declines. Although the stock attempted to form higher highs, actual buying momentum weakened, creating a divergence that added downward pressure. In previous instances of such indicator distortions, Strategy’s stock experienced plunges of more than 45%, heightening investor fears. On February 20 as well, a similar indicator shift was followed by a sharp drop of about 13%.

At present, Strategy’s stock structure has completed a downward breakout from a typical bear flag pattern. If the $119 support level collapses, the next defensive lines are expected at $106 and then $85. Applying Fibonacci retracement levels, the final downside target is analyzed at around $71, implying the possibility of an additional drop of more than 45% from the current price. Unless the stock regains $139 and demonstrates bullish strength, the current downtrend is likely to become more entrenched.

The leveraged effect, in which the stock price is excessively linked to Bitcoin’s price movements, is proving to be fatal for Strategy shareholders in a downturn. When Bitcoin stagnates or declines slightly, the stock tends to fall at more than double the pace, and this repeated vulnerability suggests that its ability to defend asset value has reached its limit. A conservative approach to Strategy shares appears necessary until the price decisively breaks above $155 and invalidates the bearish structure itself.

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