Bitcoin Proxy MicroStrategy Gets 'Strong Buy' Signal From These Technical Indicators, But Here's Why You Should Be Mindful

MicroStrategy Inc. MSTR, a stock considered an alternative to Bitcoin BTC/USD investment, received a bullish signal from moving average (MA) technical indicators.

What happened: According to the financial market analytics platform TradingView, nearly all of the simple and exponential MAs flashed a “Buy” rating for the stock, culminating in a net “Strong Buy” signal.

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Moving averages smooth out price data by creating a constantly updated average price. Typically, if the price is above a moving average, the trend is up. If the price is below a moving average, the trend is down.

On the contrary, momentum indicators painted a different story. The Moving Average Convergence Divergence (MACD) indicator, which compares a stock’s short-term price to its long-term price, flashed a ‘Sell' signal as of this writing.

Similarly, the Relative Strength Index (RSI) indicator used for spotting overbought or oversold conditions showed a ‘Neutral' reading for the stock.

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The analysis of MicroStrategy's options trading market also exhibited a bearish sentiment.

The stock had a Put/Call Ratio of 1.2 as of this writing, according to the market analytics platform Fintel, indicating that downside bets outnumbered bullish ones.

Why It Matters: MicroStrategy adopted Bitcoin as its primary reserve asset in August 2020, becoming the first publicly listed company to pursue this strategy.

Since then, it has gained 1989% in value, surpassing some of the biggest names on Wall Street, including artificial intelligence darling Nvidia Corp. The company's stock has outperformed the famed “Mag 7” group of companies in 2024, with year-to-date gains of 225%.

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MicroStrategy holds about 252,220 BTCs, worth $17.37 billion, on its balance sheet, as per its recently released third-quarter earnings report. 

The firm announced that it would raise $42 billion over the next three years through equity and debt financing to buy more Bitcoin.

Price Action: Shares of MicroStrategy were up 1.06% in after-hours trading after closing down 2.93% during Monday's regular session, data from Benzinga Pro showed.

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Photo courtesy: MicroStrategy