MSTR Experiences Dip Buying Amid MSCI Reprieve — Can This Strategy Prevent a 13% Decline?

MSTR stock has seen a rally since early January, climbing around 13% as concerns about its MSCI listing have diminished. Confidence regarding future inclusion in the S&P is also boosting market sentiment.

Key Takeaways

MSTR stock has increased by approximately 13% since early January, aided by reduced fears surrounding its MSCI status.
Although dip buying is returning, confidence remains cautious as larger capital flows are still exiting the stock.
The Money Flow Index indicates improved buying during pullbacks but has not yet reached levels that signify aggressive accumulation.
The Chaikin Money Flow reflects a decline, suggesting that while smaller investors are buying, larger investors are withdrawing from MSTR.
Price levels to watch include $184 and $198 for potential upward momentum, with downside risk if prices drop towards $139.

Beneath this recovery, data reveals a significant divide: while dip buying is making a return to MicroStrategy, larger capital flows are still exiting. This situation raises an important question: Is dip buying, particularly from smaller investors, a viable strategy, or does MSTR still have serious downside risks?

Dip Buying Returns Following MSCI Reprieve, but Sentiment Remains Cautious

The rebound of MicroStrategy started in early January, fueled by reduced worries over its MSCI status. The MSCI announced that Digital Asset Treasury Companies will remain within its indexes for the February 2026 review, which is a positive sign for neutral indexing and economic reality. Thank you to our investors and the $BTC community. — Strategy (@Strategy)

Since January 2, the stock has consistently climbed, reflecting renewed investor optimism after this recent news and ongoing enthusiasm from Michael Saylor regarding the potential for long-term inclusion in the S&P 500.

MICHAEL SAYLOR CONFIRMED ON CNBC HIS CONFIDENCE THAT MSTR WILL BE ADDED TO THE S&P 500

“IT WILL HAPPEN” 🚀 pic.twitter.com/nSmsL3Yd5h — Vivek Sen (@Vivek4real_)

This increase in confidence is also evident in the momentum indicators. The Money Flow Index (MFI), which assesses whether buying or selling pressure dominates, has broken above its descending trendline. This increase suggests that dip buying is back, as investors are now entering the market during pullbacks instead of chasing after peaks.

However, the strength of this buying trend remains cautious. The MFI has not yet reached the 56.36 mark, which would indicate a stronger shift towards aggressive accumulation.

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This hesitation likely stems from one significant factor: MSTR’s correlation with Bitcoin is relatively low, sitting at around 0.21. This means that even if Bitcoin prices rise significantly, it does not guarantee a similar fate for MicroStrategy, which primarily focuses on Bitcoin.

Weak BTC Correlation: Portfolio Slab

Due to this discrepancy, buyers appear judicious. While dip buying is occurring, it is cautious. This behavior supports short-term stabilization but does not indicate a strong potential for upward movement.

Diverging Capital Flows as CMF Declines

While the MFI suggests improved dip buying activity, capital flow data presents a much more concerning narrative. The Chaikin Money Flow (CMF), which indicates whether significant capital is flowing into or out of an asset, has declined for MSTR even as the stock price increased by 13% since January 2.

Weak Capital Flows: TradingView

This divergence is critical. If CMF decreases while prices increase, it typically signals distribution rather than accumulation. In simpler terms, it means smaller investors might be buying in, but larger investors are reducing their holdings.

This behavior aligns with the overall trend that has developed since early October, when MSTR stock began a prolonged downtrend. Capital outflows have continued during this downtrend, except for a few brief spikes, indicating that institutional investors remain hesitant.

The declining CMF also signals potential risks for drawdowns. Over the past six months, MSTR has plummeted roughly 66%, while Bitcoin has only seen a 27% decline. Another possible reason for larger investors fleeing from MicroStrategy stock might be linked to a lack of confidence.

MSTR Drawdown Risk: Portfolio Slab

This scenario compounds the risks. Although dip buying is happening, it is more cautious than aggressive. MSTR’s weak correlation with Bitcoin shows that Bitcoin’s strength does not guarantee similar outcomes for MicroStrategy. Concurrently, the ongoing CMF outflows indicate that larger investments are continuing to exit the stock, likely due to concerns that even a small drop in Bitcoin could lead to a significant decline in MSTR, which has historically proven to be true.

This double-edged situation clarifies why dip buying on its own may not suffice. Without large capital reinvesting, rebounds could either stall or reverse.

Key Price Levels for MSTR Could Challenge the Dip Buying Strategy

The price action of MSTR brings these signals to light. For momentum to build, MSTR needs to break past $184 and then $198. A clear move above $198 would indicate that dip buyers are regaining control, thereby paving the way for potential recovery towards higher levels.

Until this occurs, the risk of downside remains present. The $162 level is already facing pressure. If selling continues, MSTR could drop towards $139, representing a potential 13% decline from current prices.

MSTR Price Analysis: TradingView

This underscores why relying solely on dip buying may not be the safest approach at this time. While momentum buyers are indeed present, confirmation from larger capital investments is lacking. As long as CMF remains weak and significant money continues to stay on the sidelines, any rallies may face significant challenges.

MicroStrategy’s long-term story continues to be intertwined with Bitcoin and its balance sheet strategy. However, in the short term, the stock is at a crossroads, caught between improving dip buying and ongoing capital outflows. Until these dynamics align, the MSTR stock rebound remains at risk of further pullbacks.