MicroStrategy stock risks 80% drop if $100 neckline breaks

MicroStrategy (MSTR) is testing a monthly head-and-shoulders pattern that, if the $100-$105 neckline breaks, points to a measured decline near $20, about an 80% drop from current levels. The pattern has formed since March 2024 on the monthly chart.

A head-and-shoulders pattern consists of three peaks with the middle peak higher than the two shoulders. The neckline connects the lows between those peaks. Technical analysts use the vertical distance from the head to the neckline to estimate a downside target; for MSTR that measured target is near $20.

A similar pattern appeared before MicroStrategy’s collapse during the dot-com era, when the stock fell more than 99% from its peak over two years after breaking a comparable neckline.

Financial metrics have shifted. As of late June, MicroStrategy’s US dollar cash reserve had fallen about 38% since the start of 2026, while annual dividend obligations tied to preferred stock rose to roughly $1.2 billion, according to CryptoQuant analyst Julio Moreno. Preferred-dividend coverage declined to about 14 months from more than seven years.

The company’s preferred instrument, STRC, fell to a record low of $82.50 recently and traded mostly between $82 and $89, below its $100 par value. STRC’s effective yield rose above 13% compared with its stated dividend rate of about 11.5%.

Julio Moreno estimated restoring 24 months of preferred-dividend coverage would require about $2.8 billion, roughly twice MicroStrategy’s current cash balance. He added, “A higher cash reserve is the most direct signal the market needs to regain confidence in STRC.”

MicroStrategy holds 847,363 bitcoin acquired at an average price near $75,650 per coin, above today’s bitcoin price of about $62,600. Selling bitcoin now would realize losses relative to the acquisition cost.

To raise cash, MicroStrategy increased STRC’s dividend rate and issued common shares. In June the company sold 2.71 million MSTR common shares for about $335.5 million and used roughly $34.9 million of the proceeds to buy 520 bitcoin. Those share issuances increased the number of outstanding common shares.

If STRC remains below par, MicroStrategy may continue issuing common shares, slow bitcoin purchases, or focus on rebuilding cash reserves. Technical traders often treat a decisive break below the $100-$105 neckline as a sell signal toward the measured target near $20.