Michael Saylor’s Strategy Just Formed a Golden Cross. Why Bitcoin Bulls Shouldn’t Expect Another 700% Rally Yet.

Strategy’s (MSTR) chart just turned positive for the first time in over three years. Its 50-day moving average has moved above its 200-day average. Traders call this a “golden cross.” The last time this happened was in March 2023, and the stock rose nearly 700% in the year after that. So, many people have turned more bullish, expecting another rally. But to be honest, the signal looks pretty weak to me. The two averages are only $0.14 apart, at $135.67 and $135.53. The stock also hasn’t gotten back above its 20-day average of $147.40 yet. I also checked other chart signals that track buying strength, and they still look weak. 

What Powered the Last Rally

I think people need to understand why the signal worked so well in 2023. At that time, investors were happy to pay far more for Strategy’s shares than its Bitcoin (BTCUSD) holdings were worth. By late 2024, that premium had reached nearly 4x. So Strategy was able to sell new shares, buy more bitcoin, and continue to push the stock higher. 

But the market is no longer willing to do so now. On the simple measure tracked by SaylorTracker, the stock was worth about 0.87 times its bitcoin in October. Strategy’s own dashboard uses a different formula and shows a small premium, but even that is significantly lower than what it was in late 2024. The company’s bitcoin buying has also slowed to about $20 million to $30 million a week. Meanwhile, I pointed out recently that much more of its money is going into buying back its preferred stock instead. On Oct. 19, it also raised its cap on the buyback program to $3 billion. 

There is another risk that could hurt the stock. MSCI (MSCI), a big index company, could drop Strategy from its lists in November, and funds that follow those lists would then have to sell the stock. MSCI already flagged Strategy in a test run earlier this year. 

About Strategy Stock

Strategy operates as a Bitcoin treasury company. It offers investors varying degrees of economic exposure to Bitcoin by offering a range of securities. MSTR strategically accumulates BTC through equity and debt financing proceeds, positioning it as both an inflation hedge and a vehicle for potential value appreciation. Alongside its Bitcoin treasury operations, Strategy also provides AI-driven enterprise analytics solutions. It has a market cap of $30.6 billion. Founded in 1989, the company is headquartered in Tysons Corner, Virginia. 

Shares of the world’s largest corporate holder of Bitcoin have fallen 10.72% on a year-to-date (YTD) basis. MSTR stock was pressured by the decline in Bitcoin prices, as Strategy is sitting on billions of dollars in unrealized losses on its Bitcoin holdings at current levels. Notably, the stock fell to a low near $82, climbed to a peak near $197, and then roughly doubled off its summer bottom. 

Q2 Showed Improvement, but There's a Long Way to Go

Strategy reported its second-quarter fiscal 2026 earnings on July 29. The company posted revenue of $122.37 million, down 0.46% from the $122.93 million forecast. The loss per share came in at $24.45, missing the Wall Street consensus of $0.79. Strategy reported an operating loss of $8.3 million and a net loss of $8.6 billion, driven mainly by a non-cash Bitcoin mark-to-market charge. 

Looking forward, MSTR is set to announce its third-quarter earnings on Oct. 29. The company focused on its long-term strategy rather than giving a traditional business forecast. It wants to increase the amount of Bitcoin it holds per share, grow its digital credit business, and maintain a healthy cash reserve in US dollars. Management also wants STRC, its main digital credit product, to trade between $99 and $100. 

What Do Analysts Expect for MSTR Stock?

Wall Street is mostly bullish on MSTR stock. Clear Street raised its price target from $201 to $211 and reiterated a Buy rating ahead of the company’s Q3 earnings. The firm believes Strategy improved its financial position during the quarter by issuing common stock to buy back preferred shares. Similarly, Cantor Fitzgerald also raised the firm’s price target to $208 from $186 and kept an Overweight rating. 

Overall, analysts have a consensus “Strong Buy” rating for MSTR stock. Out of 19 analysts covering the stock, 16 have a “Strong Buy” rating, one has a “Moderate Buy” rating, and two have a “Hold” rating. The mean target price of $233.17 indicates potential upside of about 51% from current levels. 

On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.