MicroStrategy (MSTR) Stock Barely Escapes Cost-Basis Scare — A 20% Price Swing Awaits?

Core Insights - MicroStrategy stock is attempting to stabilize after a significant decline of over 12%, with Bitcoin's recent rebound near $79,000 alleviating concerns about the company's average cost basis [1] - The stock has fallen approximately 62% since early October, while Bitcoin has decreased about 38%, indicating that MicroStrategy behaves like a leveraged version of Bitcoin [2] - The 90-day rolling correlation between MicroStrategy and Bitcoin is close to 0.97, suggesting that both assets have been moving in the same direction almost daily [4] Correlation and Risk - The high correlation does not contradict the larger drawdown, as it measures direction rather than size, indicating that MicroStrategy follows Bitcoin's trend but with amplified moves due to leverage and structural risks [5] - In late January, Bitcoin briefly dipped below MicroStrategy's average purchase price of around $76,000, triggering fears of unrealized losses and adding pressure on the stock [6] - If Bitcoin weakens again, MicroStrategy's stock price is likely to follow, maintaining elevated downside risk [7] Capital Flow and Market Sentiment - The Chaikin Money Flow (CMF) has been trending higher since mid-January, suggesting that large investors were accumulating MicroStrategy shares during periods of weakness [8] - CMF is approaching the zero line, which indicates a potential shift from net outflows to net inflows; a sustained move above zero could confirm that buying pressure is outweighing selling [10] - The last significant break above the zero line occurred in early September, leading to a nearly 25% rally in the stock, making CMF a crucial indicator for any recovery attempts [10]