MicroStrategy, a prominent analytics company, has recently announced its detachment from Bitcoin and is edging closer to its historical peak. The path they are taking to achieve this goal is quite intriguing.
MicroStrategy [MSTR] has reached a peak of $198, the highest in six months and just below its previous all-time high of $200. The surge in value coincided with a mysterious message from the company’s founder, Michael Saylor.
In a recent post on X (formerly Twitter), Saylor appeared dressed like a gladiator, wearing a Bitcoin [BTC] pendant and holding a sword.
This gesture can be interpreted as his readiness to publicly defend and support BTC during times of economic uncertainty and inflation driven by fiat currencies.
Saylor stands out as one of the most optimistic supporters of BTC, believing that it is the ultimate asset and value store in history due to its capped supply and resilience to censorship.
His conviction has guided MicroStrategy’s BTC treasury strategy, a pioneering move in the industry.
The software provider, with a focus on Bitcoin, now holds almost $16 billion in BTC (equivalent to 252K coins), with more than $1.5 billion acquired in Q3 of 2024.
The Rise of MSTR Fueled by $16 Billion in BTC Holdings
The surge in MicroStrategy’s MSTR stock has been attributed to the company’s substantial BTC reserves, as highlighted by CryptoQuant.
“Since MicroStrategy started purchasing $BTC on August 11, 2020, its stock has skyrocketed by 1,208%, outperforming Bitcoin which has risen by 445%.”
Despite that, the large BTC reserves of MSTR, mainly obtained through debt instruments like convertible notes, have led to a strong correlation with the digital asset.
However, the recent increase in the company’s stock marked a clear separation from the price movements of BTC.
Starting from September, MSTR has seen a 68% rise, climbing from $114 to nearly $200. Conversely, BTC experienced an 18% increase during the same period and struggled to maintain crucial support levels at the time of reporting.
The sudden surge even surprised BTC critic Peter Schiff.
“What is happening with $MSTR? It surged by 18% in the last three days, while #Bitcoin only saw a 1% increase.”
Year-to-date, MSTR gained 177%, in comparison to BTC’s 38%, indicating that investors in MSTR enjoyed greater returns than those holding BTC.
This also implies that MSTR was trading at a premium concerning BTC.
Nevertheless, the Relative Strength Index (RSI) for MSTR signaled an overbought condition, potentially complicating the short-term forecast, particularly with the upcoming earnings season.
Some market participants have questioned why investors would opt for MSTR to indirectly hold BTC instead of directly purchasing the asset. Yet, Jeff Park from Bitwise sees MSTR as a dual-position global carry trade.
“$MSTR is simultaneously long & short global carry. Taking on debt at low rates to invest in Bitcoin is a long global carry. Bitcoin, as an asset, represents a short global carry.”
For context, a carry trade involves borrowing in a low-yield currency to invest in a high-yield asset. MicroStrategy’s Bitcoin reserves have been acquired through debt financing.
However, BTC is also viewed as a risk-averse asset and a hedge against inflation linked to fiat money. Hence, MicroStrategy’s decision might be seen as a bet against global inflation—a short global carry.