How MSTR Outperformed the S&P 500 With MicroStrategy’s Bitcoin Proxy Strategy?

The post How MSTR Outperformed the S&P 500 With MicroStrategy’s Bitcoin Proxy Strategy? appeared first on Coinpedia Fintech News

This year, the MicroStratgey market has experienced a growth of 509.12%. Reports suggest that it has outperformed every S&P component in 2024. Clearly, the unprecedented performance reflects the effectiveness of the Bitcoin strategy adopted by Micahel J Saylor, the executive chairman and co-founder of MicoStrategy.

However, there are still many who are skeptical about the long-term sustainability of the strategy. Let’s try to understand the scenario better. Dive in! 

MicoStrategy’s Unprecedented Stock Surge 

This month, the MSTR market has seen a rise of at least 84.63%. Last week, it grew nearly 22.13%. On November 21, the 24-hour trading volume of MSTR touched a peak of 4.6B, the highest reported so far this month. Between November 18 and 21, the daily volume steeply climbed from $1.42B to $4.6B – at least 223.94%.

Interestingly, on November 21, the price plummeted from the monthly peak of $536.31 to $397.01 in a single day. However, on November 22, Friday, buyers regained control, pushing the price to $421.88. Notably, on the same day, the 24-hour volume dropped from $4.6B to $2.73B. 

Experts highlight the massive surge the MicroStrategy market saw last week. They point out that the MSTR market has performed better than the most popular meme stocks in terms of 24-hour volume. 

MicoStrategy: A Bitcoin Proxy 

The prime strategy of MicroStrategy is issuing debt and using it to acquire Bitcoin. The company now holds at least 331,200 BTC tokens. This month alone, the company has purchased at least 78,980 BTC tokens (27,200 tokens on 11 November and 51,780 on 18 November). Importantly, the BTC strategy of the company has no link to its core business. Reports indicate that its core business has been in decline for over a decade. 

Premium on Bitcoin Holdings 

Data shows that the Bitcoin premium of MSTR has returned to levels last seen during the 2021 bull run. Notably, unlike GBTC, MSTR has never dropped below zero. 

Michael Saylor’s Bold Convertible Note Strategy 

MicroStrategy recently issued $3 billion in convertible notes with a 0% coupon. These notes act as call options on MSTR stock with a $672 strike price. Investors benefit only if MSTR rises significantly.

Debates Around MicroStrategy’s Approach 

As per a recent report, market bulls consider MSTR’s strategy as revolutionary, while bears liken it to ponzi schemes. 

In conclusion, MicoStrategy’s Bitcoin-driven strategy has transformed the company into a market influencer. Whether it leads to long-term success or risks remains to be seen.