MicroStrategy Inc. (NASDAQ: MSTR) suffered a blow following its Bitcoin spot ETF approval on January 10. Michael Saylor's company, considered an indirect exposure to Bitcoin (BTC), now faces powerful competitors on Wall Street.
In a series of events, the SEC finally approved 11 ETFs for the leading cryptocurrency. In response, BTC traded as high as $48,965 a day later, but MSTR did not follow suit.
Notably, MicroStrategy stock has been directly correlated with the price of Bitcoin since Michael Saylor began accumulating BTC in his company's coffers. However, this trend changed at the beginning of 2024, although MSTR slightly outperformed Bitcoin in 2023.
MicroStrategy reached a high of $727.77 per share on Wall Street's first trading day of the year and then fell. The biggest losses only began on January 11, the first day of trading for Bitcoin ETFs. MSTR opened the day at $589.99 and closed at $485.53 per share on January 12 – with a 19% loss in 48 hours.
Daily chart of MicroStrategy (NASDAQ:MSTR) versus Bitcoin (BTC). Source: TradingView
MicroStrategy holds more to Bitcoin than its capitalization
Interestingly, Michael Saylor's business intelligence company holds 189,150 BTC in its treasury. These holdings are currently worth $8.09 billion, while MicroStrategy has a company with a market cap of $6.64 billion.
Saylor began buying Bitcoin under the name MicroStrategy on August 11, 2020, spending $250 million in 21,454 BTC. Since then, MSTR has acquired 189,150 BTC holdings at an average price of $29,582 per Bitcoin.
Taking into account the reported total costs of $4.68 billion, the unrealized gain is $3.41 billion, an increase of 72.8%.
All in all, investing in MSTR poses an indirect risk not only to Bitcoin's volatility but also to its business. This entails risks and opportunities for shareholders, who can hedge their position in a diversified manner.
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Disclaimer: The content of this website should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.
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