Strategy’s (MSTR) stock traded near $129-$130 on Friday as investors assessed stronger U.S. inflation data and renewed pressure on Bitcoin. The shares have fallen sharply from their Sept. 3 intraday high of $144.92 as Treasury yields, energy prices and expectations for further Federal Reserve tightening increased.

The latest Consumer Price Index report reinforced expectations that the Federal Reserve could raise interest rates at its Sept. 15-16 meeting. Headline inflation accelerated substantially on a monthly basis, while core prices also exceeded economists’ monthly forecast. The combination has created a less supportive macroeconomic environment for rate-sensitive assets such as Strategy stock and Bitcoin.

The report also showed that U.S. core inflation jumped. One key reading cited in the report put the core CPI increase at 0.4% in August, above analysts’ expectations. Technical indicators suggest that Strategy stock could be approaching a significant move, while Bitcoin’s weakness presents an additional risk because Strategy remains the largest publicly traded corporate holder of BTC.

U.S. Consumer Inflation Report Strengthens Rate-Hike Expectations

MSTR stock could face a pullback after the United States released stronger consumer inflation data, providing additional information about the condition of the economy. According to the Bureau of Labor Statistics (BLS), headline CPI increased from 0.1% in July to 0.4% in August. On an annual basis, the increase translated into 3.4% growth, keeping inflation above the Federal Reserve’s 2% target.

Core CPI, which excludes volatile food and energy prices, rose from 0.2% in July to 0.3% in August, exceeding the expected 0.2% increase. On a month-over-month basis, the measure slipped from 2.5% to 2.4%.

The inflation figures arrived one week after the United States reported a strong nonfarm payrolls (NFP) reading. The economy added more than 162,000 jobs last month, surpassing analysts’ forecasts. The combination of the employment and inflation data led to expectations that the Federal Reserve would resume raising interest rates the following week. As shown in the report’s chart, the odds of a rate hike next week rose to 86%.

U.S. inflation could remain elevated as crude oil prices continue to rise. The average diesel price reached $6 for the first time on record, while gasoline remained at $4.25. Prices could increase further as the crisis in the Middle East escalates. The same developments have also contributed to continued increases in U.S. bond yields.

Bitcoin Weakness Adds Pressure to MSTR

The stronger inflation report adds another risk to Bitcoin and MSTR stock because both assets have generally performed well when the Federal Reserve is cutting interest rates. The report said these concerns had led investors to reduce their Bitcoin ETF holdings.

Data cited in the report showed that spot Bitcoin ETFs recorded $46 million in outflows on Tuesday, $120 million on Wednesday and $283 million on Thursday. A decline in Bitcoin could place additional pressure on Strategy because of its large BTC holdings.

Strategy holds 845,050 coins, which were valued at more than $66 billion. If Bitcoin fell from the current $78,500 to $70,000, the value of those holdings would decline to $59 billion.

Strategy stock also faces risks related to shareholder dilution through the company’s weekly capital raises. In its most recent statement, the company said it had repurchased $176 million of STRC and increased the size of the Digital Credit Securities repurchase program from $1 billion to $2 billion. The company is using funds raised through MSTR stock sales for the program.

Against that backdrop, the Federal Reserve’s Sept. 15-16 decision, subsequent Bitcoin ETF flows, Treasury yields and Bitcoin’s price are the main developments relevant to MSTR’s near-term backdrop. Investors can also track whether Strategy remains above the ascending trendline identified in the technical analysis, while the company’s capital-raising and securities-repurchase activity remains relevant to its share structure.

MSTR Technical Analysis

The daily chart shows that Strategy stock reached $144.60 on September 3 before pulling back below $130 during the week. The stock has formed an abandoned baby candlestick pattern, which is typically considered a bullish reversal signal. It has also remained above an ascending trendline connecting its lowest levels since August.

MSTR is trading above its 50-day Exponential Moving Average (EMA) and has formed a megaphone pattern, which often precedes a bullish continuation. The report therefore identifies an upward path of least resistance as long as the stock remains above the ascending trendline. If that level holds, the next key level is $144.5.

This article is for informational purposes only and should not be considered financial or investment advice. Cryptocurrency and equity markets remain highly volatile. Readers should conduct independent research before making investment decisions.