MicroStrategy Faces a Significant $30 Billion Loss in Four Days
Once revered for its impressive stock performance and audacious investment strategy in Bitcoin, MicroStrategy is currently grappling with its most substantial drop in market capitalization over a four-day period.
The company’s value plummeted by more than 35% from its peak on November 21, resulting in a loss exceeding $30 billion.
On November 26, MicroStrategy’s stock, MSTR, experienced an additional 12% decline, closing at $353 amidst escalating selling pressure.
This sharp decline has sparked fresh discussions regarding the risks associated with the company’s bold Bitcoin-centric approach.
MicroStrategy’s Stock Market Downturn
Commenting on these developments, Kobeissi Letter utilized X (previously known as Twitter) to draw attention to the situation.
“MicroStrategy’s stock, MSTR, has undergone a substantial -35% drop from its peak recorded on November 21. This translates to roughly $30 billion in market capitalization vanishing within four trading days.”
Concurrently, Bitcoin, which previously approached the $100K milestone, now trades at $93,418.96 according to CoinMarketCap.
Expanding further on this, Kobeissi Letter added that despite a brief improvement, MSTR’s stock continues to be influenced by Bitcoin’s ongoing price correction.
By November 27, the stock had fallen by 7.5% over 24 hours, settling at $354.10 based on TradingView data.
Interestingly, there has been a notable surge in interest from retail investors in MSTR shares.
MSTR Stock Activity Following Trump’s Victory
As reported by The Kobeissi Letter, retail investors poured $42 million into MicroStrategy shares in a single day last week, setting a new daily record that was eight times higher than October’s average.
Over the past week, retail investors have collectively injected $100 million into MicroStrategy, showcasing increasing confidence amidst market volatility.
Furthermore, November witnessed a significant strengthening in the correlation between MSTR and Bitcoin, particularly after Donald Trump’s election triumph.
Despite MicroStrategy’s stock experiencing a sharp 35% decline, both assets managed remarkable monthly gains, each demonstrating a 37% increase.
Therefore, looking at a broader timeframe, their performance remains strong.
The Interconnection between Bitcoin and MicroStrategy
In the last month, Bitcoin surged by 44%, while MicroStrategy recorded a 32% rally.
On an annual scale, BTC’s growth reached 146%, with MSTR surpassing it at a remarkable 599% increase, showcasing its leveraged exposure to Bitcoin’s bullish trajectory.
The price movements of MicroStrategy and other cryptocurrency-related stocks are closely linked to Bitcoin’s performance, given their ownership or revenue generation related to trading activities.
Following Trump’s victory in the U.S. election, Bitcoin’s rally gained momentum but fell short of the $100,000 mark, partly due to a high volume of put options below this level.
As expected, the recent price decline has attracted criticism from skeptics, including Peter Schiff, who took the opportunity to underscore perceived weaknesses in Bitcoin and MicroStrategy’s dependence on it.
Schiff remarked,
“It has now been four weeks since the company announced its intention to invest $42 billion in Bitcoin over three years. MicroStrategy has already spent $10 billion. At this pace, the three-year plan will conclude in about 16 weeks. Upon completion of the purchases, both Bitcoin and MSTR are likely to experience a downturn.”