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- MicroStrategy’s stock has dipped 60% in the past year, but its Bitcoin holdings are still profitable, with a 16% gain.
- The company’s stock struggles may be more about market hedging than Bitcoin’s fundamentals.
- MicroStrategy’s recent Bitcoin purchase boosts its holdings to $56 billion, demonstrating continued confidence in its Bitcoin strategy.
MicroStrategy (MSTR) stock has experienced significant volatility this year, with a nearly 60% drop over the past 12 months, raising doubts about the company’s Bitcoin investment strategy. But a closer look at its long-term performance paints a more positive picture. Despite short-term struggles, MicroStrategy’s Bitcoin holdings are still profitable, and its overall stock performance remains impressive. Here’s a breakdown of why the company’s Bitcoin play may not be as exposed as it seems.
Bitcoin Holdings Still Delivering Strong Returns
Despite a sharp dip in stock price, MicroStrategy remains significantly profitable from its Bitcoin investments. According to BitcoinTreasuries.NET, the company’s average purchase price for its Bitcoin holdings is around $74,430. With Bitcoin trading at about $86,000, MicroStrategy is still up roughly 16% on its initial Bitcoin investments.
In addition, over the past five years, MSTR stock has skyrocketed by more than 500%, far outpacing tech giants like Apple and Microsoft, which have seen gains of 130% and 120%, respectively. Even over a two-year horizon, MicroStrategy stock has gained 226%, well above its tech counterparts.
The Role of MicroStrategy in Crypto Market Hedging
A key factor contributing to MSTR’s recent price slump is its position as a hedge for major investors in the cryptocurrency market. As BitMine chairman Tom Lee pointed out, MicroStrategy’s options chain has become the most liquid way to hedge Bitcoin exposure. This has led to shorts and puts on MSTR, putting downward pressure on the stock, despite Bitcoin’s relative stability.
Market analyst Kyle Rodda also highlighted the risk that a major drop in Bitcoin prices could force MicroStrategy to liquidate its holdings, which would further impact both the stock price and Bitcoin market. However, Rodda noted that such a scenario is still far off, and the fundamental value of owning Bitcoin remains strong, even if MSTR stock falters.
Also Read: Robert Kiyosaki Turns $2.25M Bitcoin Gains Into $27.5K/Month Cash-Flowing Businesses
Recent Bitcoin Acquisition Boosts Confidence
In mid-November, MicroStrategy made a major purchase, acquiring 8,178 BTC for $835.6 million, increasing its total Bitcoin holdings to nearly 650,000 BTC, worth close to $56 billion. This aggressive buy shows that the company remains committed to its Bitcoin strategy, despite market fluctuations and challenges in the broader crypto sector.
While MicroStrategy’s stock may face pressure in the short term, its long-term Bitcoin strategy continues to show promise. The company’s consistent Bitcoin purchases and impressive equity growth over the past five years suggest that its conviction in the digital asset is still intact. Investors looking for exposure to Bitcoin through equity may still find value in MSTR, despite the current turbulence.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
