The Stock of Strategy Surges Just in Time. Why It’s Not Enough to Halt the Bear Trend

Shares of Strategy surged on Monday as investors responded to former President Trump's proposal for a U.S. strategic cryptocurrency reserve. However, the stock retreated after hitting key technical resistance levels.

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The rally came at a crucial moment. On Friday, the stock nearly fell below a critical chart level that many considered a make-or-break point for bullish investors.

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Shares of Strategy, previously known as MicroStrategy Inc., jumped as much as 15.5% early Monday, reaching an intraday peak of $295.10. However, the gains faded, and the stock was up just 3.6% in late morning trading.

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The company disclosed on Monday that it held 499,096 bitcoins as of March 2, valued at approximately $45.1 billion based on current prices.

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Despite Monday's rally, Strategy’s stock has been under pressure for months, with the downward trend accelerating in February as bitcoin prices declined. The stock closed Friday 46% below its record close of $473.83 on November 20, marking its lowest level since the election.

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A critical point for the stock has been the 200-day moving average (DMA), widely viewed by technical analysts as a dividing line between long-term uptrends and downtrends. Currently, this level stands at $232.68.

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On Friday, the stock briefly dipped below the 200-DMA during the session but managed to close above it. This was the first test of that level since early September, and the rebound from that point provided temporary relief for bullish investors.

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However, while the bounce prevented further immediate declines, it pushed the stock into significant resistance zones, where selling pressure intensified.

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According to the support-resistance reversal principle, former support levels can become barriers to future gains. For Strategy, the first major resistance zone lies between $279 and $293, with a secondary resistance range between $304 and $322.

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Additionally, the 50-day moving average (DMA)—a measure of short-term trends—currently hovers around $331, creating another hurdle for the stock.

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Even if the stock clears these technical obstacles, the long-term bearish trend remains intact. To break this downward pattern of lower highs and lower lows, the stock would need to surpass the January 21 high of $404.42.

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Given these challenges, it is not surprising that Monday’s initial surge into the resistance zone was quickly reversed after the market opened.

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Skepticism About a U.S. Crypto Reserve:
Beyond technical factors, investor skepticism surrounding the feasibility of Trump's proposed crypto reserve also weighed on the stock.

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Mike O’Rourke, chief market strategist at JonesTrading, expressed doubts about the federal government’s ability to implement such a program under current economic conditions.

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“While it can’t be entirely ruled out, it would be incredibly financially irresponsible for the federal government to make open-market bitcoin purchases considering the current deficit situation,” O’Rourke wrote.

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For Strategy’s stock to regain momentum, it would need to climb 5.4% from current levels just to re-enter the first major resistance zone. Investors looking for another catalyst may have to wait for the White House crypto summit scheduled for Friday.

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Other cryptocurrency-related stocks also experienced volatile trading on Monday.

• Coinbase Global Inc. shares surged 8.2% early in the session but trimmed those gains to 1.8% by late morning.
• Robinhood Markets Inc. saw a similar pattern, rising as much as 9.5% before pulling back to a 0.5% gain.
• Tesla Inc., which reported owning 11,509 bitcoins valued at approximately $1.1 billion by the end of 2024, rose 2% after climbing as much as 3.7% earlier in the day.

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Despite the excitement surrounding Trump's comments, the technical challenges and policy uncertainties present significant obstacles for cryptocurrency-related stocks, including Strategy. Investors remain cautious, with future gains depending on the outcome of upcoming policy discussions and broader market sentiment.

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