Shares of Strategy Inc. (MSTR) continued to decline in overnight trading after a significant drop of over 7% on Wednesday. This decline coincided with a dip in the price of bitcoin (BTC), which fell to below $62,000, marking its lowest point in months. In just 24 hours, bitcoin’s value plummeted by more than 8%.
Earlier this week, Strategy made headlines by announcing the sale of 32 bitcoins, its first sale since 2022, which sparked a wider sell-off in the cryptocurrency market. Notably, the company has only sold bitcoin once previously, back in December 2022. According to Paul Howard, senior director at liquidity provider Wincent, this broad sell-off initiated by Strategy’s announcement, coupled with speculative concerns regarding Mt. Gox liquidations, indicates a potential continuation of market downturns. Howard highlighted that some traders are now considering $50,000 as a possible bottom for bitcoin this year.
On Wall Street, sentiment regarding Strategy has turned cautious. Canaccord analyst Joseph Vafi slashed the price target for MSTR by over 27%, from $224 to $163, while maintaining a ‘Buy’ rating on the shares. Vafi pointed out that the market reacted negatively to Strategy’s bitcoin sale, despite its relatively small scale. He emphasized that selling bitcoin to fund dividends may sometimes make more sense in the long run than liquidating shares of the company.
Mizuho also reduced its price target for Strategy, lowering it from $320 to $265, but kept an ‘Outperform’ rating, expressing confidence in the firm even amid the ongoing “crypto winter.”
Adding to the prevailing bearish sentiment, Peter Schiff, CEO and Chief Global Strategist at Euro Pacific Capital, warned about a further downturn in cryptocurrencies. He pointed out that the charts for Bitcoin, Ethereum, and Solana are troubling, suggesting a potential upheaval in the market. At the time of his comments, Ethereum (ETH) had fallen over 6%, trading at approximately $1,745.60, while Solana (SOL) had seen a decline exceeding 8%, trading at around $68.33.
Retail sentiment around MSTR and Bitcoin appeared particularly grim, with discussions on Stocktwits placing them in the ‘extremely bearish’ category, scoring only 13 out of 100— the lowest sentiment rating this year. Some users expressed concerns that the situation could worsen, questioning the viability of Strategy’s business under current conditions.
Over the past year, MSTR stock has experienced a staggering decline of more than 67%, mirroring the downturn in bitcoin, which has lost over 40% of its value. Compounding the issue, the iShares Bitcoin ETF (IBIT) has also fallen nearly 39% in the same timeframe.
