Originally published on: November 27, 2024
MicroStrategy experienced its biggest four-day market capitalization drop ever, raising doubts about its role as a leveraged Bitcoin investment platform. The company’s market value plummeted by over 35% from its peak on Nov. 21, wiping out a staggering $30 billion.
According to the Kobeissi Letter, this sharp decline has put MicroStrategy in uncharted territory. Despite a slight uptick in stock price, the firm suffered a 7.5% drop as Bitcoin underwent a correction during the same period.
While both Bitcoin and MicroStrategy have seen impressive gains over the long term, doubts arise regarding the volatility of MicroStrategy’s stock as a proxy for Bitcoin. Investors have been eyeing the company as a means to leverage bets on Bitcoin’s performance, but the recent significant drop raises concerns about its stability.
The increased volatility is attributed to a surge in retail traders entering the market, attracted by MicroStrategy’s $2.6 billion note offering. Even large institutional investors like Allianz have shown interest in the company, further complicating its position in the market.
As Bitcoin continues its meteoric rise, MicroStrategy’s rollercoaster ride serves as a cautionary tale for those looking to capitalize on the cryptocurrency boom. The interplay between these two entities highlights the evolving landscape of digital investments and the risks associated with them.
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