MicroStrategy Shares Attract $6 Million in Buy Positions Despite Sharp Drop

Interestingly, experienced traders are building long positions in MicroStrategy during the recent pullback. But the stock still moves closely with Bitcoin, and any recovery looks limited for now.

Key Takeaways

• MicroStrategy shares fell about 41% in a month, but smart money wallets were actually building long positions during the recent selloff.
• On Hyperliquid, $6.1 million in longs is up against $3.5 million in shorts, with a net long position of $2.5 million for profitable traders.
• MicroStrategy's stock moves closely with Bitcoin; analysts cut price targets, and a drop in Bitcoin below $60,000 could add more pressure.

MicroStrategy (MSTR) shares have dropped about 41% in a month, a much steeper decline than Bitcoin itself. Still, the most closely watched wallets on a crypto platform actually added to their long positions during the worst week of that drop. That points to a notable move against the trend in the market.

Smart Investors Are Adding Long Positions During the Drop

An analysis of smart money positions in MicroStrategy perpetual futures, traded on Hyperliquid, shows that wallets labeled by Nansen for consistently profitable traders currently hold a net long position of $2.5 million (€2.2 million). The long-to-short ratio is 1.74, with $6.1 million (€5.3 million) in longs versus $3.5 million (€3 million) in shorts. That is a sharp increase from May, when only three wallets had positions, compared with nine now.

These smart investors mostly built their long positions during June's decline, which suggests they see the recent selloff as overdone. By contrast, so-called whale wallets are basically neutral, with a ratio of 1.03 on a book value of $19.1 million (€16.6 million). That shows conviction is mostly concentrated in the smart money group.

Strong Correlation With Bitcoin Is Driving MicroStrategy's Price

The strong correlation between MicroStrategy and Bitcoin is a key factor in all of this. A 30-day correlation analysis shows a reading of 0.90, which means MicroStrategy's stock price moves almost in lockstep with Bitcoin's. That makes sense, since the company holds more than 845,000 BTC and the stock acts as a proxy for the crypto asset.

Macro indicators, on the other hand, have little influence. For example, the correlation with the MOVE index, a measure of bond market volatility, is only -0.24, and it is negative with the U.S. dollar index. That suggests the recent drop is mostly being driven by moves in the crypto market, not broader macro factors.

The options market supports that view. In early June, the put-call ratio was high, which pointed to pessimism, but it quickly flipped back toward calls, signaling growing bullish positioning. Open interest, however, stayed high, which shows existing hedges are still in place even as new buying interest shows up.

A Recovery Is Possible, But There Are Limits

MicroStrategy's stock seems to be finding support around $114.28 (€99), where selling pressure has eased since early June. The biggest long position on Hyperliquid was opened around $131.77 (€114) with a liquidation level at $101.70 (€88), while the biggest short position sits at $130.65 (€113) with a liquidation level at $186.98 (€162). That points to a possible trading range where the stock could recover.

Analysts have recently cut their price targets, which suggests any rebound will probably be limited. For example, Canaccord Genuity lowered its price target from $224 (€194) to $163 (€141), while Mizuho made a similar adjustment. That supports the idea that these current buy positions are more of a rebound trade than the start of a lasting trend reversal.

What happens next still depends heavily on Bitcoin itself, which has recently been trading around $61,500 (€53,300) after falling 25% in a month. MicroStrategy bought another 1,550 BTC in early June, which underscores its commitment to Bitcoin. A further drop below $60,000 (€52,000) for Bitcoin could weaken confidence in MicroStrategy and put pressure on the long positions.

Why This Matters for European Investors

For European investors, it is interesting to see how a tech and crypto-linked stock like MicroStrategy stays so closely tied to Bitcoin. The moves in MSTR can also offer a read on sentiment and risk across the broader crypto market. Watching smart money positions and correlations can help with gauging possible price moves, especially in a market that is becoming more and more connected to traditional stocks.