MicroStrategy (MSTR) is a technology company that offers business analytics and artificial intelligence solutions to customers in industries like retail, healthcare, government, and IT services. It provides these services to companies like Pfizer, Sony, Visa, and Hilton.
The company is, nonetheless, known for its Bitcoin holding strategy. In this, it channels most of its profits to purchase as many coins as possible. It has also used other sources of cash, like convertible bonds, to buy more coins.
In the past few years, MicroStrategy has become the biggest corporate holder of Bitcoin. Just last week, it completed buying more coins, bringing its total ownership to 244,800 coins, which are now valued at over $15 billion.
Data shows that its Bitcoin holdings have been highly profitable since the cost basis was about $9.4 billion.Â
MicroStrategy’s founder, Michael Saylor, has become one of the biggest Bitcoin advocates in the world. He believes that the coin will continue doing well in the long term, with his forecast being $13 million by 2045.Â
MicroStrategy’s stock was trading at $203 while its HypeIndex figure jumped to 99%.
Positive hype
MicroStrategy has become the biggest holder of Bitcoin globally, with its holdings being more than those of the American government.
Bitcoin, despite its volatility, has been a highly successful asset, rising from below $1 in 2009 to almost $65,000 today.
Most recently, Bitcoin jumped from this month's low of $52,000 to $65,000, and analysts expect it to continue rising in the longer term.
Bitcoin’s supply in exchanges has continueddwindledast few months, a sign that most investors are bullish.
Bitcoin experienced just little volatility when the German government and Mt.Gox liquidated coins worth over $6 billion. This is a sign that the industry has become big enough such that these amounts did not cause a big impact.
Technically, Bitcoin has avoided forming a death cross pattern, and instead, has moved above the 200-day and 50-day Exponential Moving Averages (EMA). A death cross would have led to a major decline in the asset.
MicroStrategy will benefit from the recent decision by the Federal Reserve to start cutting interest rates. It slashed rates by 0.50% last week and signaled that more were coming.
The crypto fear and greed index has moved from the fear zone and is quickly approaching the greed zone. Cryptocurrencies do well when the index moves to the greed zone.
MicroStrategy is often seen as a better and cheaper alternative to buying spot Bitcoin ETFs.
Negative hype
The biggest concern about MSTR is that it has overexposed itself to Bitcoin, which is the biggest part of its balance sheet. As a result, its stock would underperform the market if Bitcoin moves into another crypto winter.
There are also concerns that it is severely overvalued since its Bitcoin holdings are worth $15 billion while its market cap has soared to over $30 billion.
MicroStrategy could also find itself in a liquidity crisis because it has committed not to sell its coins anytime soon.
Summary of MicroStrategy stock
MicroStrategy shares have done well this year, rising by over 120%. It has outperformed the S&P 500 index and most stocks.
This performance happened as the company’s Bitcoin holdings continued to have robust unrealized profits.
The stock has remained above the 50-day and 200-day moving averages while oscillators have pointed upwards.
Therefore, the stock will likely continue rising as bulls target the next key resistance level at $183.70, which is about 23% above the current level.
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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
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