Why MicroStrategy’s stock has slid 40% in the past month even as Bitcoin treads water

MicroStrategy’s share price has dropped almost 40% to $290 since it rocketed to an all-time high on November 20.

Still, Michael Saylor, the founder and chairman of MicroStrategy, keeps adding the world’s largest cryptocurrency to his software company’s balance sheet.

On Monday, he announced that MicroStrategy had acquired more than 2,000 Bitcoin, increasing its total holdings to 444,600.

The acquisition of even more of the cryptocurrency comes as Bitcoin’s price treads water around $95,000 after an explosive fourth quarter, according to CoinGecko.

Increased volatility

In November, Donald Trump won reelection, and the crypto markets soared in response.

Bitcoin crossed $100,000, a slew of other cryptocurrencies notched all-time highs, and the share prices of MicroStrategy jumped in response, earning the firm a spot on the coveted Nasdaq-100 index.

In 2020, the publicly traded data analytics firm added Bitcoin to its balance sheet for the first time and has since increased its Bitcoin holdings 20 times over.

Its current stockpile is worth more than $42 billion at current prices.

The company’s software business, which caters towards large companies, only generates a yearly revenue of less than $500 million.

Yet, its total value on the stock market is more than $70 billion. By comparison, Airbnb generated $10 billion in revenue in 2023 and is worth about $82 billion.

For many traders, MicroStrategy’s stock has become a leveraged bet on Bitcoin’s price, or when investors borrow money to bet on an asset.

With more leverage comes more volatility, which translates to steeper changes for the company’s stock compared to the swings in Bitcoin’s price.

Crypto market movers

• Bitcoin is up 2.3% over the past 24 hours to trade at $95,719.
• Ethereum is also up 2.5% over the same period to $3,420.

What we’re reading

• Crypto enthusiasts launch audacious campaign to force Swiss central bank to buy Bitcoin ― DL News
• 2024 Was Full of Fascinating Crypto News. Here Are Its Top Moments ― Unchained
• What is DeSci? And why’re Vitalik & CZ backing it? ― Milk Road
• How to predict price w/ options markets — Milk Road
• Grayscale adds Solana, AI tokens to top 20 list ― DL News

Ben Weiss is DL News’ Dubai Correspondent. Got a tip? Email him at bweiss@dlnews.com.