One of the most impressive gains ever in stocks took at least a brief respite on Thursday, with Bitcoin Development Company MicroStrategy (MSTR) posting a double-digit percentage loss even as the price of bitcoin {{BTC}} soared to new levels . record high just under $100,000.
At one point lower, more than 20%, MicroStrategy ended the session with a loss of 16.2%. This move is little more than a big mistake on the longer-term chart, with shares still up more than fivefold in 2024 and almost eightfold ahead from year-ago levels.
“MicroStrategy [valuation] has completely divorced itself from bitcoin fundamentals,” Andrew Left of Citron Research wrote earlier today. A former stock market bull who four years ago recommended that investors get long bitcoin by buying MicroStrategy said he remains bullish on BTC but has hedged by going short. MSTR.
Of that valuation, MicroStrategy’s market cap yesterday and earlier on Thursday was $100 million, or more than three times the value of the roughly 331,000 bitcoin on its balance sheet ($32.5 million at the current price of nearly $98,000). With the current price drop, MicroStrategy’s market cap has fallen to around $80 million.
“MicroStrategy officially meets my criteria for a textbook parabolic short,” wrote widely followed technician Bracco on X ahead of the market open on Thursday. Bracco posted three consecutive days of double-digit percentage gains and another big overnight gain, among other factors including that MSTR’s dollar volume on Wednesday was higher than that of mega-cap names like Nvidia and Tesla and that a leveraged ETF was issued specifically for the shares. the fifth most traded fund in the entire market.
Writing early Thursday in the WSJ’s Heard on the Street column, Jonathan Weil noted the positive flywheel effect that has given stocks such a boost lately. The stock’s high valuation allows the company to raise capital and buy bitcoin at favorable prices. Bitcoin rises, stocks rise further, executive chairman Michael Saylor and team buy even more bitcoin. And so on.
