MicroStrategy , one of the largest Bitcoin holders, has seen its stock price drop by 23.84% over the past 30 days, further widening the gap in its correlation with Bitcoin’s price and suggesting that investors are no longer willing to pay for what may be an inflated stock.
MSTR Price Plummets
MicroStrategy’s (MSTR) stock price plunged by 23.84% in the last 30 days and is now more than 40% down from its all-time high of $483.84 on November 20.
MicroStrategy’s price declined by more than 40% since its November highs.
“The stock’s underperformance, despite substantial Bitcoin acquisitions, indicates that investors are no longer willing to pay an implied price of $200,000 (or more) per Bitcoin through MicroStrategy when it can be purchased directly at a much lower cost,” said market analysts from 10x Research in their latest newsletter. They added that investors are becoming more rational and moving away from viewing MicroStrategy as an alternative way to invest in Bitcoin.
Sponsored
The drop came after the company revealed plans to issue a large number of new shares to help fund more Bitcoin purchases. This is part of a larger $42 billion funding plan over the next three years, with $21 billion set to come from issuing new shares.
MicroStrategy has recently increased its Bitcoin holdings, bringing the total to 446,400 BTC
worth around $42.3 billion.
The company has financed its Bitcoin acquisitions primarily by issuing 0% convertible notes and bonds. These debt instruments allow the company to raise capital for Bitcoin purchases without immediately diluting its stock.
Diverged From Bitcoin
However, what’s interesting is that while MicroStrategy’s stock has lost more than 40% of its value over the past month, Bitcoin has only fallen by 0.5% in the same period, creating a noticeable divergence from MicroStrategy’s stock performance.
Bitcoin trades at almost the same price as a month ago. Source: CMC
Since MicroStrategy became one of the largest Bitcoin investors, its MSTR price has typically moved in sync with Bitcoin, closely following its price changes.
The company’s stock has surged by 342% year-to-date, aligning with a 121% rise in Bitcoin’s price.
Butent todel dabatinis akivaizdus divergence kelia susirupinima rinkos dalyviams. The Kobeissi Letter analysts noted that the proposed share increase puts MicroStrategy in a difficult situation.
“If the plan is approved, bears will say that this is a highly dilutive move for existing shareholders. However, if it is not approved, then MicroStrategy will be unable to continue buying Bitcoin on leverage.”
What to Expect Near-Term
10x Research highlights that BlackRock’s Larry Fink and MicroStrategy’s Michael Saylor have played key roles in shaping the narrative of the current Bitcoin bull market, driving significant interest.
However, with MicroStrategy shares down over 40% from their peak and other companies adopting Bitcoin as a treasury asset on a smaller scale, the impact of MicroStrategy’s Bitcoin strategy appears to be losing momentum.
“Bitcoin enters the New Year with caution, as liquidity, trading volumes, and stablecoin issuance will be critical in shaping its next move,” 10x Research analysts note.
Stablecoin net inflows have turned negative in recent days, making it an important data point to watch in the first few days of the New Year.
Why This Matters
As MicroStrategy’s stock slides and its plans to issue additional shares fuel concerns over shareholder dilution, broader market sentiment could be impacted, potentially weighing on Bitcoin. If investors perceive the company’s strategy as unsustainable or too risky, it may dampen the bullish outlook for Bitcoin.
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