Is MicroStrategy’s Bitcoin strategy working? MSTR hits $196 near ATH

MicroStrategy (MSTR) stock hit $196, just 2% shy of its all-time high, fueled by the company’s aggressive Bitcoin acquisition strategy. The firm is the largest public corporate owner of Bitcoin, holding nearly $16 billion of the asset.

MicroStrategy’s breakout fuels Bitcoin rally as MSTR jumps 14%

MSTR’s share price is on the cusp of a six-month breakout. MicroStrategy was a notable outlier amid a weak stock market, with shares surging to $190 for the first time since late March. MSTR stock is up 14% since the beginning of this month. 

Markus Thielen, founder of 10x Research, said that the breakout in the Microstrategy stock price would be bullish for Bitcoin, pushing it higher for the rest of October. Thielen noted that the MSTR stock surging past $180 could lead to additional bullish momentum. However, he said that the stock price is already 44% more expensive than BTC.

Thielen stated in the report that the rally could prompt MicroStrategy to take on additional debt to acquire more Bitcoin. Demand for the company’s notes has remained strong, with each issuance consistently upsized.

Raising even more debt to purchase bitcoin seems logical. A breakout in MicroStrategy’s stock could have a ‘tail wags the dog’ effect, where the momentum in its shares positively impacts Bitcoin’s price, creating a feedback loop.

Markus Thielen

During bullish market phases, MSTR’s stock tends to behave like a leveraged version of Bitcoin, reflecting the tight correlation between the two. On-chain analytics firm CryptoQuant noted this trend, highlighting the company’s deep integration with cryptocurrency.

MicroStrategy gains 59% on Bitcoin, but S&P 500 is still distant

Since August 2020, when MicroStrategy began buying Bitcoin, its stock has soared by 1,208%, compared to Bitcoin’s 445% increase over the same period. Under CEO Michael Saylor’s leadership, the company has consistently raised capital to expand its Bitcoin portfolio.

According to a September 2024 filing, the business software company now owns 252,220 Bitcoin, which represents approximately 1.2% of Bitcoin’s total supply. The company’s holdings are currently valued at around $16 billion , with an average acquisition cost just over $39,000 per Bitcoin, compared to Bitcoin’s current market price of roughly $62,000.

Michael Saylor, CEO of MicroStrategy, has a vision to make the firm a key player in the Bitcoin ecosystem. This vision has driven the company’s use of capital markets to fuel its aggressive purchasing strategy. The Bitcoin approach has propelled the firm’s market capitalization to more than $35 billion, placing it on par with several corporations in the coveted S&P 500.

However, MicroStrategy is unlikely to be placed on the public market anytime soon. Why? Because a company must be profitable for a quarter and a half to be included in the S&P 500. MicroStrategy reported a net loss of $102 million in the second quarter of 2024.