MicroStrategy Stock Sees Significant Divergence from Bitcoin Price

MicroStrategy stock and Bitcoin price have historically had a close correlation as the company became the biggest BTC investor. However, recent market trends have shown a significant divergence between the two, with MicroStrategy shares dropping by 21% in the last 30 days, while Bitcoin is down by less than 2%.

MicroStrategy’s Performance and Bitcoin Holdings

MicroStrategy’s shares have risen by over 320% this year, while Bitcoin has jumped by 120%. This outperformance, combined with the lack of an expense ratio, has led some investors to view MicroStrategy as a better alternative to BTC and spot Bitcoin ETFs. The company currently holds 446,400 Bitcoin coins valued at over $42 billion, significantly lower than its market cap of over $65 billion.

MicroStrategy has continued to accumulate Bitcoin this year. The company’s medium-term goal is to raise $42 billion through equity and fixed income between 2025 and 2027.

The Reason Behind the Divergence

The primary reason for the current divergence between Bitcoin and MicroStrategy stock is the company’s announcement of plans to issue 10 billion shares to fund new Bitcoin purchases. This move is expected to dilute existing shareholders, reducing their ownership in the company and potentially reducing earnings per share.

Something doesn’t add up here: MicroStrategy, $MSTR, has been known as the most popular “levered” #Bitcoin play of the year. Meanwhile, over the last month Bitcoin has gained +2% while $MSTR is currently down nearly -50%. What is happening?

Outlook for MicroStrategy Stock in 2025

Despite the challenges, there is a strong likelihood that MicroStrategy’s shareholders will approve the share count increase. Michael Saylor, a key advocate for the plan, holds 46.8% of the outstanding shares. The decline in MicroStrategy stock may reflect the market adjusting its valuation premium, as the company is perceived to be highly overvalued by some.

Tips for investors:

  • Keep an eye on Bitcoin performance, as it will heavily influence MicroStrategy stock in 2025.
  • Consider the potential risks and rewards of investing in MicroStrategy stock, given its high correlation with Bitcoin price.
  • Monitor the company’s progress in raising capital and its impact on shareholders.

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