Shares of MicroStrategy Incorporated (MSTR) lost 5% of their value on Monday as investors are starting to become concerned about Bitcoin prices.
MicroStrategy, the largest of the bitcoin mining companies, has become just one of many proxies for Bitcoin prices. Speculative investors favor MicroStrategy shares over Bitcoin as they tend to move in a leveraged manner compared to the cryptocurrency.
For example, Bitcoin rallied roughly 60% following the November elections while MicroStrategy shares have gained almost 150% over the same period.
Bitcoin has spent the last month trading in a range after flirting with the $100,000 price level for the first time.
Round numbers are often pegged as resistance for stocks, indices and cryptocurrencies as they serve as psychological “markers” for investors.
The trading range has resulted in Bitcoin dropping below its 50-day moving averages for the first time since early October. At that time, the test of this significant trendline resulted in a renewed rally that took bitcoin from $60,000 to $100,000.
MicroStrategy shares also suffered a break below their critical 50-day on Monday, their first since Mid-September.
Shares of MicroStrategy now sit firmly on their $300 price tag, which should also be considered significant as a round number.
A break below $300 will increase selling pressure on the stock, targeting a retracement to $250, an 18% decline.
MicroStrategy shares remain in a long-term bull market trend with a price target of $600. That said, the stock has a short-term outlook of “correction” with a $250 target.
