Key Points
- MicroStrategy’s (MSTR) stock has surged, decoupling from Bitcoin and nearing its all-time high.
- The firm’s large Bitcoin holdings, totaling nearly $16 billion, have been linked to the stock’s rally.
MicroStrategy, often abbreviated as MSTR, has seen a significant rise in its stock value. The company’s stock price has reached a six-month high of $198, just shy of its all-time high (ATH) of $200. This surge coincided with a cryptic message from the company’s founder, Michael Saylor.
Saylor’s Cryptic Message
Saylor recently posted a picture on X (previously known as Twitter) where he was dressed in gladiator-like attire, holding a sword, and wearing a Bitcoin pendant. This image could be interpreted as Saylor’s commitment to defending and promoting Bitcoin in the face of economic instability and inflation driven by fiat currencies.
Saylor is well-known for his bullish stance on Bitcoin. He views it as the most superior asset and store of value in human history, due to its fixed supply and resistance to censorship. His belief in Bitcoin has shaped MicroStrategy’s treasury strategy, which he pioneered.
MicroStrategy, a software provider with a focus on Bitcoin, currently holds nearly $16 billion in Bitcoin, equivalent to 252K coins. Over $1.5 billion of this was acquired in the third quarter of 2024.
Bitcoin Holdings and MSTR Rally
The rally of MSTR’s stock has been attributed to the company’s substantial Bitcoin holdings. Since MicroStrategy started purchasing Bitcoin in August 2020, its stock has surged by 1,208%, while Bitcoin itself has risen by 445%.
Despite this, MSTR’s stock recently decoupled from Bitcoin. Since September, MSTR’s stock has rallied 68%, rising from $114 to nearly $200. In contrast, Bitcoin increased only 18% during the same period.
On a year-to-date basis, MSTR’s stock has risen 177%, while Bitcoin has increased by 38%. This indicates that MSTR investors have seen more profits than those investing directly in Bitcoin. As a result, MSTR’s stock is trading at a premium relative to Bitcoin.
However, MSTR’s Relative Strength Index (RSI) currently indicates that the stock is overbought, which could impact its short-term outlook, especially as the earnings season approaches.
Despite the potential benefits of holding MSTR, some market observers have questioned why investors would choose to indirectly hold Bitcoin through MSTR rather than buying the asset directly. Jeff Park from Bitwise sees MSTR as a simultaneous long and short global carry trade.
Carry trade involves borrowing from a low-interest currency to invest in a high-yielding asset. MicroStrategy’s Bitcoin holdings have been acquired through debt. However, Bitcoin is also seen as a risk-off asset and a hedge against inflation linked to fiat currencies. This suggests that MicroStrategy’s strategy could be seen as a bet against global inflation, a short global carry.