Strategy (formerly MicroStrategy) announced on Monday that they have purchased Bitcoin for 1.25 billion USD. They bought 13,627 Bitcoin, which is their largest purchase in six months. Several of the recent purchases were between 88,000 USD and 92,000 USD, which is why more and more investors see this range as an important psychological support level.
If Bitcoin falls significantly below this level, MSTR could face increased risk of a short-term decline. This is because investor confidence would weaken and the valuation premium would be pressured downward.
Do buying patterns set market standards for MSTR?
After MicroStrategy's latest purchase, the company now holds 687,410 BTC in its reserves. After the news, the company's stock remained quiet. As of this article's writing, MSTR is trading around $162.
Since December, Strategy has made seven different Bitcoin purchases. The average price per Bitcoin varied slightly between purchases, ranging from as low as $88,210 to as high as $92,098.
These recurring purchases at roughly the same level have become a benchmark for traders. Their consistent pricing has become a reference point for future buying.
Therefore, investors will certainly watch to see if Strategy continues buying in this range. If the price clearly moves below this zone, it could negatively impact market sentiment and make the MSTR stock more volatile in the short term.
Premium Compression tests investors' conviction
Strategy's stock often follows Bitcoin closely. Investors see it as a leveraged way to gain BTC exposure rather than a typical software company. The company's financing approach can amplify this effect.
Strategy continues to raise funds by issuing new securities to buy more Bitcoin. This works best when the stock trades at a premium. But it becomes harder if that premium shrinks.
Previously, the company has bought Bitcoin at prices below $88,000, well below the bottom of the most recent range. A sustained price drop below this level does not automatically force Strategy to sell part of its holdings, but it could shift market discussion.
Shareholders may then begin to view the latest purchase less as a planned strategy and more as buying near a price range where Bitcoin struggles to break above. This in turn could worsen sentiment and pressure the stock's premium relative to its Bitcoin holdings.
The premium is important because it influences how investors perceive the risk of dilution.
If MSTR becomes weaker than Bitcoin, future capital raising may become less attractive to current shareholders. Then the market may need to reconsider how quickly Strategy should continue buying and how sensitive they are to Bitcoin's price levels.
In practice, this could lead to greater fluctuations in the MSTR stock. The risk is highest when Bitcoin tests new bottom levels or moves near technical thresholds that many follow.
