MicroStrategy’s Bitcoin Bet Falters Amid Nasdaq 100 Debut
The software company and top corporate Bitcoin holder, MicroStrategy Inc. (NASDAQ:MSTR), suffered a rough start to its tenure among the Nasdaq 100, with shares plummeting over 8.5% on Monday. This marks the company’s fifth losing session in the past six, with a staggering 37% decline since its all-time high last month.
A Risky Bitcoin Purchase
MicroStrategy announced the sale of $561 million in common stock to purchase an additional 5,262 Bitcoins at an average price of $106,662 per coin, bringing its total Bitcoin holdings to a remarkable 444,262 BTC. However, the size and timing of this purchase raised eyebrows among traders and analysts. The average price paid for the new Bitcoin stash is roughly 12% above current levels, exceeding the Dec. 17 record close of $106,151 per Bitcoin.
Critics Weigh In
Peter Schiff, a well-known Bitcoin skeptic, took a jab at MicroStrategy’s CEO Michael Saylor, saying: “It seems like you are running out of firepower to keep propping up Bitcoin. Plus, not only is this your smallest buy, but the first time your average purchase price has been above the market price on the Monday you disclosed the buy.” Markets & Mayhem, a popular account, wrote: “$MSTR continues to look quite heavy… The ‘infinite money glitch’ isn’t really a glitch at all. It’s just trying to replace a failing core SaaS business with something that attracts today’s high-beta-loving speculators.”
A Shaky Strategy
MicroStrategy’s deep ties to Bitcoin have been both its crown jewel and its Achilles’ heel. With over $41 billion worth of Bitcoin on its balance sheet as of December 2024, the company is inextricably linked to the volatile movements of the cryptocurrency market. The latest purchase suggests cracks in its strategy, as the company may be overextending itself as Bitcoin prices falter.
Pivoting Away from Software
MicroStrategy’s shift away from its original software business has raised concerns about its ability to generate sustainable cash flow from its core operations. The company has leaned heavily into Bitcoin speculation, prompting questions about its long-term viability.
What’s Next for MSTR?
While MicroStrategy remains a favorite among Bitcoin bulls, the stock’s recent performance signals caution. As 2024 nears its end, all eyes will be on Bitcoin’s price trajectory. If the cryptocurrency can’t regain upward momentum, MicroStrategy’s high-stakes game could face mounting pressure.
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