The "God" of Cryptocurrency Trading in the US Stock Market

 

MicroStrategy's recent acquisition of 55,500 BTC for $5.4 billion at an average price of $97,862 per coin has sparked widespread discussions in both the US stock market and the cryptocurrency community. The company's impressive BTC yields of 35.2% for the quarter and 59.3% for the year highlight the success of its Bitcoin investment strategy, reflecting a broader trend of institutional interest in cryptocurrencies. This move underscores growing confidence in digital assets and could impact investment strategies and market dynamics moving forward.

 

 

Before discussing this company, let's first analyze the trend of Bitcoin:

 

 

By the evening of November 21st, Bitcoin had exceeded $98,000 per coin. However, in recent days, Bitcoin's price has experienced a slight decline, currently standing at $92,722.5 per coin.

 

Now, let's delve into the stock price trend of MSTR. Observing MSTR's stock price candlestick chart, a strong correlation with Bitcoin's price trend is evident.

 

Throughout the year, MSTR consistently increased its Bitcoin holdings:

 

October 7th: 7,420 BTC acquired, totaling 252,220 coins.

November 12th: 27,200 BTC purchased, reaching 279,420 coins.

November 19th: 51,780 BTC bought, totaling 331,200 coins.

November 25th: 55,500 BTC obtained, summing up to 386,700 coins. Additionally, in late October, MSTR revealed a $42 billion, three-year plan to acquire more Bitcoin.

 

MSTR aims to transform into a "Bitcoin bank," focusing solely on Bitcoin and assets denominated in Bitcoin. The company intends to raise funds in the US stock market and utilize them to make large-scale Bitcoin purchases. This strategy is designed to boost Bitcoin prices, subsequently elevating MSTR's stock price and facilitating continued financing opportunities.

 

This approach positions MSTR as a potential "perpetual motion machine" for generating revenue, in theory.

 

 

On November 21st, Citron Research, a prominent short-selling institution, announced its decision to short-sell MSTR. Despite Bitcoin's ongoing price surge to a record high that day, MSTR's stock plummeted by 16.16%, closing at $397.28, marking its most significant single-day decline since April 30th.

 

Citron Research expressed admiration for MSTR's Chairman Michael Saylor's bullish stance on Bitcoin but highlighted that MSTR's trading volume appeared disconnected from Bitcoin's underlying fundamentals. They suggested that MSTR's stock might be overvalued.

 

Presently, MicroStrategy's market capitalization exceeds three times the value of its Bitcoin holdings, implying that investors are effectively paying $250,000 for each Bitcoin held by MSTR, far above the market price of around $90,000.

 

The market's willingness to assign MSTR a valuation significantly surpassing the value of its Bitcoin reserves, coupled with volatility several times higher than Bitcoin's price fluctuations, raises questions.

To comprehend this anomaly, it's essential to examine two critical facets of MSTR's trading structure design.

 

Here we've created a simple mind map to help you understand the operation mode of MSTR from stocks to cryptocurrency and then to debt.

This intricate integration of stocks, debts, and cryptocurrencies at an advanced level represents a rare feat in the capital market.

Considering this premium level, if Bitcoin's price continues its upward trajectory, MSTR's market capitalization could feasibly surpass $150 billion.

 

 

The future trajectory of MSTR's stock inherently aligns closely with Bitcoin's price movements. Additionally, Bitcoin's price outlook hinges on potential policy shifts under the Trump administration and global geopolitical developments.

 

Given Bitcoin's safe-haven attributes, heightened tensions in regions like the Middle East, the Russia-Ukraine conflict, or the Korean Peninsula could propel Bitcoin to new heights. Consequently, MSTR, with its substantial Bitcoin holdings, might also reach new peaks.