As a seasoned crypto investor with a decade of experience under my belt, the recent tumble of MicroStrategy stock (MSTR) has left me a bit shaken. I remember the euphoria when it hit its peak of $535 on November 21st, but now, just over four trading days later, we’ve witnessed one of the firm’s largest four-day drops in history – a staggering 35% plunge. This translates to an erased market cap of around $30 billion. The parallels between MSTR and Bitcoin are undeniable, especially considering that MSTR is often seen as a ‘levered Bitcoin play’.
The price of MicroStrategy stock (MSTR) has plummeted by a significant 35% from its highest point of $535, which was reached on November 21. On Tuesday, the shares dipped as low as $340 but managed to rebound slightly, closing the day’s trading at $353, based on data provided by Google Finance.
According to the Kobeissi Letter published on November 27th, this event translates roughly to a $30 billion decrease in market value within only four consecutive trading days. This is among the company’s most significant four-day declines ever recorded in their history.
The big stock slump comes as Bitcoin pulled back around 9% from its all-time high on Nov. 22.
Saylor Premium Hits Retail
Additionally, it’s worth noting that MicroStrategy stocks have dropped approximately four times as much as Bitcoin in the last week. This decline seems to be a result of retail investors piling into the stock before its peak, according to Kobeissi’s analysis.
People often say that MicroStrategy acts as a ‘highly volatile Bitcoin investment.’ However, the current situation with it is taking Bitcoin’s price fluctuations to an unprecedented level.
WOW.
MicroStrategy stock, $MSTR, just fell a MASSIVE -35% from its peak seen on November 21st.
That’s ~$30 BILLION of market cap erased in 4 trading days as #Bitcoin fell ~9% from its high.
This is one $MSTR‘s largest 4-day drops in history.
What just happened?
(a thread)
— The Kobeissi Letter (@KobeissiLetter) November 26, 2024
Last week, particularly on November 20th, retail buyers purchased approximately $42 million of MSTR shares in a single day. In total, they invested close to $100 million of their funds in MSTR shares over the entire week.
Today’s purchase set a new single-day retail buying record, being more than eight times greater than the typical daily average for October.
In the recent period, MicroStrategy has significantly outpaced Bitcoin by nearly tripling its performance over the past two months. Yet, in the last couple of days, this relationship has expanded, leading to MicroStrategy showing “noticeably higher volatility” compared to before.
At present, the company owns approximately 386,700 Bitcoins, valued at roughly $36 billion. Yet, considering its market capitalization stands at $73 billion, the stock price is currently over double the value of its Bitcoin holdings. However, it’s worth noting that the premium between the two has become somewhat smaller.
The key question that needs answering is whether Saylor has the ability to keep borrowing funds to purchase Bitcoin, as posed by the Kobeissi Letter.
On November 26th, Saylor calmly highlighted that the company’s Bitcoin treasury operations had generated a return of 35.2%. This translates to an impressive gain of 88,820 Bitcoins for its shareholders.
To date in this quarter, Mastercard’s treasury activities have generated a Bitcoin Yield of 35.2%. This has resulted in approximately 88,820 Bitcoins being accrued for our shareholders, which is equivalent to around 1586 Bitcoins per day. Given the current market price of $92,000 per Bitcoin, this translates to an impressive $8.2 billion for the quarter or approximately $146 million daily earnings.
— Michael Saylor (@saylor) November 26, 2024
Crypto Stocks Tank
Coinbase’s stocks (COIN) have likewise experienced a decrease, falling by 12% in the last seven days and trading at $295 outside regular hours on Tuesday. This decline is more significant than the retreat of Bitcoin.
Simultaneously, shares of mining companies are plummeting. For instance, Marathon Digital dropped by 5.5%, ending at $25, and Riot Blockchain experienced a 7.4% decrease, closing at $11.17.
The total value of cryptocurrencies dropped by approximately 3.6%, reaching around $3.34 trillion, as Bitcoin momentarily fell below $91,000 during late-night trading on Tuesday. However, it started to recover and moved towards $93,000 during the early hours of Wednesday’s Asian trading session.
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2024-11-27 12:23