Bitcoin holdings of US-listed company MicroStrategy, the leader in the field, have transformed it from an obscure software development company into one of the most well-known companies globally. Its stock price has soared more than 20-fold in the past five years, with a market capitalization exceeding $74 billion.
However, after MicroStrategy became the first Bitcoin company to join the Nasdaq 100 index on December 23, its stock price failed to maintain its upward momentum and instead declined. On the previous (30th) night, the US stock market closed at $302.96, a drop of 8.19%, and a significant correction of 20.34% in the past month.
Analyst: MicroStrategy's Virtuous Cycle May Have Been Broken
As a crazy Bitcoin bull, MicroStrategy, during this year's bull market, not only did not sell Bitcoin for profit, but instead continued to issue convertible bonds and sell stocks to raise funds to increase its Bitcoin holdings. In this year alone, MicroStrategy has spent $22 billion to acquire 257,250 Bitcoin, and its current holdings have reached 446,400 Bitcoin, with a total purchase cost of $27.9 billion.
In this regard, CoinDesk's marketing director Stephen Alpher stated yesterday (30th) in an article that after being included in the Nasdaq 100 index, MicroStrategy's stock price has continued to decline, and the "issuing bonds + selling stocks - buying Bitcoin" virtuous cycle may have been broken. Currently, there are multiple signals that may indicate that MicroStrategy's stock price has formed a stage-level top:
Soros' reflexivity theory explains the interactive relationship between investors and financial markets: because of the increase in returns, investors believe that the stock price will rise - the stock price rises - the rising stock price makes it easier for the company to raise funds - this will further increase returns - the stock price continues to be pushed up... But if something cannot last forever, it will stop.
MicroStrategy's stock price reached a historical high in November, but after being included in the Nasdaq 100 index in December, MicroStrategy has corrected by 30%, and is down nearly half from its historical high in November. Currently, there are signs everywhere that MicroStrategy has formed a stage-level top:
. The stock price has soared several times since the company started investing in Bitcoin in August 2020
. Founder Michael Saylor is constantly promoting Bitcoin
. MicroStrategy keeps emphasizing its Bitcoin returns, which reminds people of the Internet bubble in the late 1990s
. More and more imitators of MicroStrategy are emerging
Will MicroStrategy Rebound?
Although MicroStrategy's stock price has experienced a significant correction recently, its stock price has still provided satisfactory returns to investors with a 357% increase so far this year. Some analysts also point out that MicroStrategy's current decline is not unrelated to the correction of Bitcoin that began on the 17th of this month. As Bitcoin rebounds and sets new highs again next year, MicroStrategy's stock price is expected to continue to rise and even hit new highs.
Additionally, some bullish analysts also point out that MicroStrategy's stock price has experienced three similar corrections over the past three years, but ultimately they have all recovered and continued to rise, so there is no need to be too worried.
Further Reading: Analysts: MicroStrategy's Leverage Is Lower Than You Think, Bitcoin Needs to Drop 80% to Trigger Liability Alarm