Bitcoin investor MicroStrategy is facing one of its toughest phases this year, quickly sparking speculation that its high-conviction Bitcoin bet is unraveling. However, looking at the story over a year, the narrative is quite different.
According to Google Finance data, MicroStrategy (MSTR) stock has dropped nearly 60% over the past year, with a year-to-date (YTD) decline of over 40%. The stock was trading close to $300 in October, but has since fallen to about $170 at the time of writing.
While some interpret the current situation as a revelation of its Bitcoin model being "exposed," MicroStrategy still holds double-digit profits on its Bitcoin purchases, and its stock's long-term performance continues to outperform major tech stocks.
According to data from BitcoinTreasuries.NET, MicroStrategy acquired its Bitcoin at an average price of $74,430. With Bitcoin trading at around $86,000, MicroStrategy is still up nearly 16% on its Bitcoin investment.
Over a five-year window, MicroStrategy has increased by over 500%, according to Google Finance data. In comparison, Apple recorded a 130% increase, while Microsoft achieved nearly a 120% increase in the same timeframe.
Even over a shorter two-year period, MicroStrategy stock has risen by 226%, surpassing Apple's 43% increase and Microsoft's 25% increase during the same period.
This recent decline may be less related to Bitcoin's fundamentals and more about how the largest investors are hedging their crypto exposure.
In a recent CNBC interview, BitMine Chairman Tom Lee explained that MicroStrategy has become the most convenient way to hedge Bitcoin.
"People can use MicroStrategy's options chain, which has very high liquidity, to hedge all their crypto assets," he said. "The only convenient way to hedge long positions is to short MicroStrategy or buy put options."
This dynamic has made MicroStrategy an unexpected pressure valve in the crypto market, absorbing hedging, shorting, volatility, and market anxiety that are not closely related to its underlying Bitcoin strategy and the validity of its long-term argument.
Despite the slowdown in stock price, MicroStrategy Chairman Michael Saylor has shown his determination on X, stating that he "will not back down."
On November 17, MicroStrategy announced the purchase of 8,178 Bitcoins for $835.6 million. This purchase significantly increased from previous weekly investments of between 400 to 500 Bitcoins. This acquisition raised its total holdings to 649,870 Bitcoins, valued at nearly $56 billion.
On November 6, crypto market maker Wintermute identified stablecoins, exchange-traded funds (ETFs), and digital asset treasuries (DAT) as key sources of liquidity in the crypto market, stating that the slowdown in liquidity has led to the recent market slump.
The company noted that liquidity inflows in these three areas have reached a plateau.
Data aggregation platform DefiLlama shows that after $20 billion in crypto positions were liquidated, DAT inflows began to slow in October. DAT inflows dropped from nearly $11 billion in September to about $2 billion in October, a decrease of 80%.
Inflows in November further declined. As of Monday, DAT inflows for this month have just exceeded $500 million, a 75% drop compared to October.
Related: Coinbase "doubles down" on Solana through latest DEX acquisition
Original article: “MicroStrategy under Michael Saylor is suffering losses, but its Bitcoin (BTC) strategy remains intact”
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