MSTR stock is in for a big move as short interest hits 12.6%

MSTR’s stock price has remained in a tight range since early February, closely tracking the performance of Bitcoin, which has stagnated between $60,000 and $70,000.

Strategic shares traded at $134 on Tuesday, up nearly 30% from their February lows. It remains well below its high of $545.

A look at Alpha’s data shows that more investors are shorting the company and hoping to profit from its collapse. The company’s short interest rate reached 12.6%, significantly higher than last year’s low of 5%.

Short sellers are likely to see the stock as having multiple red flags. The first major thing is that Bitcoin (BTC) may drop to $50,000 in the coming weeks. It created a bearish pennant pattern, and the ongoing war in Iran prompted investors to dump riskier assets.

Additionally, while the Strategy continued to buy Bitcoin, it did so by selling its common stock, a move that resulted in a significant drop. Its outstanding shares have reached 310 million compared to less than 80 million a year ago.

The strategy has also lost the premium it had a few years ago and the net asset value has fallen below 1. At the same time, analysts continued to withdraw their estimates. Mizuho lowered the target from $403 to $320, while BTIG moved it from $630 to $250.

MSTR stock price history chart

The 12-hour chart shows that Strategy’s stock price has been flat over the past month. With this action, the stock formed a symmetrical triangle pattern while the volatility decreased. The average true range, which measures volatility, continued to decline.

A closer look shows that the two triangle pattern lines are close to converging. Therefore, this triangle pattern means that the stock will have a big move in both directions in the near future.

In the event of a decline, the stock will likely test the year-to-date lows of $104 and then $100. On the other hand, a strong bullish breakout could see it go to the psychological point at $150 and above.