The US-listed company Bitcoin holding giant MicroStrategy has raised cash through the sale of stocks and bonds on multiple occasions in the past to purchase Bitcoin, and as Bitcoin continues to soar, the market is optimistic about MicroStrategy's continued accumulation of Bitcoin, causing MicroStrategy's stock price to rise steadily.
However, MicroStrategy's stock price has been declining continuously since reaching a high of $473.83 on November 20 last year, despite the company's continued purchase of Bitcoin during this period, and being included in the NASDAQ 100 index last month, the stock price is still declining and is currently reported at $289.62, a 44% drop from the highest point last November.
The leveraged Bitcoin narrative is fading
In this regard, 10x Research released a new report today, stating that the institution has emphasized in recent weeks that MicroStrategy has an overvaluation problem, and investors do not see it as a true leveraged Bitcoin investment tool, but rather pay a high premium to indirectly hold Bitcoin.
Although MicroStrategy continues to purchase large amounts of Bitcoin, its stock price performance has been poor recently, and analysts say this indicates that investors are no longer willing to pay an implied price of up to $200,000 (or more) for Bitcoin through the company, as the cost of directly purchasing Bitcoin is much lower.
The report believes that investors are no longer willing to support MicroStrategy with an inflated net asset value (NAV), and this change reflects investors becoming more rational and no longer easily accepting MicroStrategy as an "leveraged Bitcoin investment tool" narrative.
10x Research mentioned that it is undeniable that BlackRock CEO Larry Fink and MicroStrategy founder Michael Saylor played a key role in shaping the narrative of this bull market, greatly driving market interest in Bitcoin, and some investors unable to directly purchase Bitcoin ETFs chose MicroStrategy as an alternative.
However, with MicroStrategy's stock price down 44% from its high, and other companies adding Bitcoin to their financial reserves on a smaller scale, the tailwind of this narrative seems to be weakening, and combined with other factors, Bitcoin is entering the new year with a cautious attitude, and 10x Research believes that liquidity, trading volume, and stablecoin issuance momentum will be the key factors determining the direction of Bitcoin.
Has the virtuous cycle been broken?
As a staunch Bitcoin bull, MicroStrategy has not only not sold Bitcoin to profit during this Bitcoin bull market, but has continued to issue convertible bonds and sell stocks to raise funds to increase its Bitcoin holdings. Last year alone, MicroStrategy spent $22 billion to buy 257,250 Bitcoin, and its current holdings have reached 446,400 Bitcoin, with a total purchase cost of $27.9 billion.
MicroStrategy also proposed the 21/21 plan at the end of October last year, which will raise $21 billion in equity financing and issue $21 billion in fixed-income products (including debt, convertible notes, and preferred stock) over the next three years, a total of $42 billion, to purchase more Bitcoin.
However, similar to the view of 10x Research, CoinDesk Marketing Editor Stephen Alpher wrote an article at the end of last month analyzing that as MicroStrategy was included in the NASDAQ 100 index, its stock price has continued to decline, and the "debt + stock sale - Bitcoin purchase" virtuous cycle may have been broken, and multiple signals may have already hinted that MicroStrategy's stock price has formed a stage top.
