MicroStrategy Trading At 'Insane' 256% Premium To Bitcoin Holdings, Research Shows

MicroStrategy Incorporated MSTR is trading at an astonishing 256% premium to the net asset value (NAV) of its Bitcoin BTC/USD holdings, according to research conducted by BitMEX.

The analysis highlights the extreme valuation disparity between MicroStrategy's current market capitalization, driven by its aggressive Bitcoin acquisition strategy, and the actual value of the Bitcoin it holds.

"MicroStrategy's premium is insane, perhaps in part driven by some financial regulators banning people from buying Bitcoin ETFs. These people are so desperate for Bitcoin exposure, they buy MSTR instead, despite the premium," BitMEX Research stated.

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Breaking Down the Numbers

MicroStrategy currently holds 331,200 bitcoin, valued at approximately $32.3 billion, assuming a Bitcoin price of $97,600.

However, with a fully diluted market cap of $115 billion and a share price of $474, the company's valuation significantly exceeds its Bitcoin holdings.

This disparity reflects an implicit bet by investors on the company's ability to leverage its premium for further Bitcoin acquisitions.

BitMEX Research explored scenarios where MicroStrategy could theoretically align its Bitcoin per share value with its current trading price of $474, assuming the Bitcoin price remains constant at $97,600 and the premium persists.

Under these conditions, MicroStrategy would need to:

• Issue 157 million additional shares, raising $157 billion.
• Accumulate 1.9 million Bitcoin in total holdings.
• Reach a market capitalization of $674 billion, with a share price climbing to $1,685.

This iterative calculation assumes the company continues issuing new equity at a premium to acquire more Bitcoin, a strategy MicroStrategy has employed since 2020.

"If the premium persists, the company can keep issuing new shares until the value of the Bitcoin per share equals the current share price," BitMEX Research added.

Premium Justified By Strategy?

While some argue that the premium reflects investor enthusiasm for indirect Bitcoin exposure, others view it as a speculative bubble.

BitMEX Research emphasized that the premium may only remain sustainable if investors continue to believe in MicroStrategy's yield strategy.

"At that point, with a $1,685 share price, people may need to think the premium will still remain for another round of this," the analysis stated.

The company's holdings position it as a major Bitcoin proxy, the 256% premium suggests that investors are paying a significant markup for exposure, far exceeding the actual value of its Bitcoin.

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