As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous trends come and go. However, the current premium that MicroStrategy Inc (MSTR) enjoys over Bitcoin is a phenomenon that I find myself grappling with.
For a significant number of years, investors have seen MicroStrategy Inc (NASDAQ: MSTR) as an indirect investment in Bitcoin. Consequently, the value of MSTR shares has consistently remained above the market value of Bitcoin.
In their recent findings, Steno Research suggests that the significant 300% price difference between MSTR and BTC is unlikely to continue. Over the past week, MicroStrategy’s stock soared to new record highs, boosting its year-to-date growth by over 242%. Meanwhile, Bitcoin has experienced a rise of over 50%.
Investors and shareholders in Microstrategy have been benefiting from a significant increase in value, but they should exercise caution moving forward. According to Steno Research analyst Mads Eberhardt, this optimism can be attributed partly to the diminishing effect of MicroStrategy’s recent stock split on confidence levels.
Furthermore, it’s anticipated that the emergence of Bitcoin spot ETFs available for trading in the U.S. could lessen the motivation for investors to own MicroStrategy stocks as they turn towards these ETFs instead.
According to the reports, it was observed that investors might choose to own Bitcoin directly instead of MicroStrategy shares, as regulators become increasingly supportive of Bitcoin investment products. This inclination towards Bitcoin could continue if Donald Trump gets re-elected, as suggested by Steno.
The report further added that it shows MicroStrategy’s valuation is “diverging significantly from a straightforward calculation of its asset and business fundamentals”.
According to the recent analysis, Bitcoin is expected to show strong performance not just this quarter but also up until 2025. This suggests that an even larger amount of purchases would be necessary to keep MicroStrategy’s current price advantage stable. The report additionally pointed out that MicroStrategy’s current price advantage is questionable as it stayed below the 200% mark for the majority of the 2021 crypto market boom.
MicroStrategy Overtakes Amazon in This Metric
In a recent blog post about the X platform, MicroStrategy’s Executive Chairman Michael Saylor highlighted that his company’s stock had an exceptional performance compared to tech giants Amazon Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL), in terms of trading volumes on Friday. Saylor stated, “Bitcoin is part of the extraordinary eight” (or “Bitcoin joins the Magnificent 8”).
#Bitcoin makes the Magnificent 8
— Michael Saylor⚡️ (@saylor) October 27, 2024
During the last trading week’s session, MicroStrategy reported a significant trading volume of approximately $5.8 billion, outperforming tech giants such as Amazon and Alphabet, with their respective trading volumes at $5.5 billion and $2.4 billion for the same period.
It’s worth noting that despite having a relatively small market capitalization of $47.48 billion, MicroStrategy manages to trade more frequently than some of the “Magnificent 7” on a daily basis, mainly because it’s well-known for being one of the biggest companies that own Bitcoin.
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2024-10-28 18:01