MicroStrategy’s Big Bitcoin Game May Signal Volatility Ahead

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MIAMI, FLORIDA – JUNE 04: MicroStrategy CEO Michael Saylor walks through the Bitcoin 2021 … [+] Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida. The crypto conference is expected to draw 50,000 people and runs from Friday, June 4 through June 6th. (Photo by Joe Raedle/Getty Images)

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With over 386,700 BTC in its treasury, Microstrategy has become more than just an innovator in corporate finance. It is now a key bitcoin market player, whose influence extends beyond driving direct BTC demand and helping shape market sentiment. Microstrategy’s bitcoin game is now touching a broader array of financial metrics. This offers valuable insights about market evolution. Notably, the company’s latest 0% debt issuance for further bitcoin purchases shows market enthusiasm and anticipation of heightened volatility.

MicroStrategy’s own stock price has been swinging wildly recently. While bitcoin has risen 135% so far this year, MSTR has surged an extraordinary 740% at its highest point. Just this month, it saw an impressive 142% rally, followed by a 37% plunge within days.

This behavior demonstrates that, while strongly correlated to bitcoin, MSTR price exacerbates its movements, outperforming the leading crypto by over five times. This dynamic is also mirrored in MicroStrategy’s valuation. Despite its bitcoin holdings worth approximately $36.7 billion, MicroStrategy’s current market cap exceeds $92 billion. The gap is too large to be explained by its original software business, which means that MSTR has effectively become a bitcoin volatility amplifier.

How did this transformation happen, and what does it mean for the bitcoin market?

MicroStrategy’s Bitcoin Buying Spree

Founded in 1989 by Michael Saylor, MicroStrategy began as a business intelligence company specializing in analytics software. It later expanded into mobile applications and cloud-based services. The company went public in 1998 with a valuation of $1.12 billion. For more than two decades, its market cap remained relatively stable, averaging around this figure with brief peaks above $2 billion. It was near $1.3 billion in 2020—the year that marked a dramatic pivot in the company’s trajectory.

On August 11, 2020, Saylor announced MicroStrategy’s first Bitcoin purchase: 21,454 BTC at an average price of $11,652. This sparked a buying spree, with the most recent acquisition completed last week, when the company bought 55,000 BTC at an average price … Read More