"Shares of MicroStrategy ( NASDAQ:MSTR) are trading 20% below their 200-day moving average of $332.74, coinciding with a sharp deterioration in retail investor sentiment. Reddit discussions have turned decidedly bearish, with sentiment scores falling to 28 out of 100 in early December. The shift comes as Bitcoin dropped 16.6% from its mid-November peak of $104,050 to current levels around $86,774, putting pressure on MicroStrategy's $56 billion cryptocurrency holdings."
"A single post on r/options has dominated MicroStrategy discussion for 48 hours, drawing 51 upvotes and 46 comments. The author wrote: "With BTC pulling back hard, I'm wondering if now's the time to go after MSTR with puts. The company's been super aggressive with leverage and holds a huge amount of bitcoin. If BTC drops further, say toward 74K, I feel like MSTR's balance sheet could start to look pretty shaky.""
"The post continues: "I know MSTR has been a beast on the way up, but the leverage they're using feels like it could cut both ways. Anyone else thinking about this trade, or am I missing something obvious?" Comments on the thread echoed similar concerns, with one user noting: "The leverage is insane. If BTC keeps dropping, MSTR could get margin called or forced to liquidate holdings at the worst possible time.""
MicroStrategy shares trade roughly 20% below their 200-day moving average amid a marked decline in retail sentiment and Reddit sentiment scores around 28/100. Bitcoin slid about 16.6% from a mid-November peak near $104,050 to roughly $86,774, pressuring the company's approximately $56 billion in cryptocurrency holdings. The company established a $1.4 billion reserve to fund future dividend and interest payments to reduce the risk of asset sales. MicroStrategy's beta of 3.37 amplifies crypto volatility. Retail traders on options forums are discussing puts amid concerns over aggressive leverage, $8.22 billion debt, and only $54.3 million in cash, alongside an RSI near 28.21 and prolonged oversold readings.
Read at 24/7 Wall St.
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