MicroStrategy Shares Are Down With Bitcoin Today: What's Going On?

Zinger Key Points

MicroStrategy's stock is heavily influenced by Bitcoin's price fluctuations, as the company holds a large amount of Bitcoin.
Recent Bitcoin market weakness and uncertainty around crypto regulations have led to declines in both Bitcoin and MicroStrategy's stocks.
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MicroStrategy Incorporated MSTR shares closed down Wednesday, due to a decline in Bitcoin's BTC/USD price, which dropped 1.73% to $104,313.65.

What To Know: Bitcoin transaction volume over $100,000 decreased by 15%, while netflows dropped 307%, signaling a possible cooling of market activity. Over $161 million in liquidations occurred in the past 24 hours, which put additional pressure on the market.

While BlackRock clients facilitated the purchase of $600 million in Bitcoin via an ETF, market sentiment remains cautious due to the nature of these transactions.

Bitcoin's liquidity is concentrated between $96,000 and $111,000, with support levels between $88,000-$95,000. If these levels fail, Bitcoin could drop further, potentially impacting MicroStrategy's stock as well.

Despite the short-term volatility, Bitcoin’s overall bullish trend remains intact as long as it stays above $58,000, which provides some stability for MicroStrategy.

Why It Matters: For MicroStrategy, the company's heavy exposure to Bitcoin potentially means its stock is especially sensitive to Bitcoin's price. The company also recently received shareholder approval for a proposal to increase its share count, which could lead to more Bitcoin purchases in the future.

MSTR Price Action: Microstrategy shares closed Wednesday down 3.03% at $377.31, according to Benzinga Pro.