Shares of MicroStrategy Inc. MSTR fell more than 8.5% Monday, marking a rough debut to its nascent tenure among the Nasdaq 100.
The software company and top corporate Bitcoin BTC/USD holder has struggled lately, logging its fifth losing session in the past six sessions and plunging over 37% since its all-time high last month.
Why Is MicroStrategy Falling?
On Monday, MicroStrategy announced it sold $561 million in common stock to purchase an additional 5,262 Bitcoins at an average price of $106,662 per coin. This brings the company's total Bitcoin holdings to a staggering 444,262 BTC.
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Yet, both the size and the timing of this purchase raised eyebrows among traders and analysts.
The latest Bitcoin purchase was Michael Saylor‘s smallest to date. It’s a sharp contrast to the bold, big-ticket acquisitions that have defined his crypto strategy thus far.
The average price paid for the new Bitcoin stash is roughly 12% above current levels. Even more telling, the price exceeds the Dec. 17 record close of $106,151 per Bitcoin—an unusual move for a company known for strategically buying dips.
Critics didn't hold back. Peter Schiff, a well-known Bitcoin skeptic, took a jab at Saylor on X, saying:
"It seems like you are running out of firepower to keep propping up Bitcoin. Plus, not only is this your smallest buy, but the first time your average purchase price has been above the market price on the Monday you disclosed the buy."
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Meanwhile, the market's reaction reflected growing unease.
"$MSTR continues to look quite heavy," wrote the account Markets & Mayhem on X. "The ‘infinite money glitch' isn't really a glitch at all. It's just trying to replace a failing core SaaS business with something that attracts today's high-beta-loving speculators."
A Risky Game Of Leverage
MicroStrategy's deep ties to Bitcoin have been both its crown jewel and its Achilles' heel. With over $41 billion worth of Bitcoin on its balance sheet as of December 2024, the company is inextricably linked to the volatile movements of the cryptocurrency market.
Yet, its latest purchase suggests cracks in its strategy. Not only was this one of the smallest Bitcoin buys in recent years, but it also indicates that MicroStrategy may be overextending itself as Bitcoin prices falter.
Adding to investor concerns is MicroStrategy’s pivot away from its original software business. The company has leaned heavily into Bitcoin speculation, prompting questions about its ability to generate sustainable cash flow from its core operations.
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What’s Next For MSTR?
While MicroStrategy remains a favorite among Bitcoin bulls, the stock’s recent performance signals caution. The company has shed nearly 40% of its value in just over a month, despite Bitcoin trading near $100,000.
The broader Nasdaq 100 debut was supposed to be a moment of validation for MicroStrategy, but instead, it highlighted the risks of its hyper-concentrated bet on cryptocurrency.
As 2024 nears its end, all eyes will be on Bitcoin’s price trajectory. If the cryptocurrency can’t regain upward momentum, MicroStrategy’s high-stakes game could face mounting pressure.
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