- MSTR’s inclusion in the Nasdaq 100 underscored Bitcoin’s increasing institutional recognition.
- It also makes MSTR’s stock—and indirectly, Bitcoin—more susceptible to market volatility.
Microstrategy [MSTR], the largest corporate holder of Bitcoin [BTC], has seen its stock soar sixfold this year, pushing its market cap to a massive $94 billion.
With 423,650 BTC in its treasury, including a hefty 149,880 purchased just last month, MSTR is now set to join the Nasdaq 100, which is expected to fuel further stock gains.
But as Bitcoin hovers near the volatile $100K mark, the spotlight is on the growing link between MSTR’s stock and BTC’s price.
Could market turbulence and looming macroeconomic shifts dent MSTR’s valuation, and will the ripple effects shake Bitcoin’s short-term price? The stakes have never been higher.
Assessing how MSTR is connected to Bitcoin
MSTR stock, hitting its all-time high of $473 just two weeks after the election results, was no fluke. With over 400,000 BTC in its reserves, Bitcoin pumps fuel MSTR’s meteoric rise, delivering daily jumps of over 10% when timed right.
However, the timing of its Nasdaq listing could be tricky. Investors are in a dilemma: Buy in at a lower price, or has Bitcoin’s peak already passed? While MSTR stock offers retail investors a wayto ride Bitcoin’s wave, the risk is real – it could backfire if the market takes a downturn.
Ultimately, it comes down to risk appetite. Are investors viewing current market volatility as a short-term blip, or as a long-term trend, making entry too risky as prices may be too high?
This risk was starkly reflected on MSTR’s daily chart. After hitting an all-time high, the longest red candlestick in its history formed, marking a sharp 16% drop in a single day, bringing its price down to a low of $371.
MSTR’s stock valuation is closely tied to Bitcoin’s performance. This link has allowed MicroStrategy to outperform even the “Magnificent Seven” stocks, posting a staggering 600% YTD growth.
However, this also highlights the significant risk of tethering its fortunes to Bitcoin’s volatility.
What happens when risk appetite hits a plateau?
Despite bullish factors like market makers targeting new highs, institutions buying dips, and speculation about Bitcoin as a reserve asset, Bitcoin hasn’t broken its all-time high of $104K, set over a week ago. Trump’s “pro-crypto” stance hasn’t pushed it past this mark either.
This pause highlights the market’s hesitation as investors weigh the potential risks. It may just be the calm before the storm.
Looking ahead to 2025, there’s growing buzz about Bitcoin reaching $200K. However, macroeconomic trends will be key in shaping investor sentiment.
The impact on MSTR? Despite its stock’s close ties to Bitcoin’s price action, it remains vulnerable to the same risks as any other stock – swings driven by economic uncertainty and shifting government regulations.
Unfavorable monetary policy could quickly dampen investor risk appetite. This could trigger a pullback from MSTR holdings and put its profit margins under pressure.
In such a scenario, MSTR might have no choice but to offload some of its Bitcoin reserves.
Source : CryptoQuant
Read Bitcoin’s [BTC] Price Prediction 2024-25
MicroStrategy currently holds a record amount of Bitcoin on its balance sheet, significantly raising the stakes. Therefore, the consequences of a market shift could be severe.
Remember 2022, when Germany sold off $9 billion in Bitcoin, causing prices to crash from $70K to $50K?
If MSTR follows suit, the impact on Bitcoin’s price could be similarly catastrophic – something worth considering.
