MicroStrategy Stock Price Gains Mirror Bitcoin Price

Updated: 19 April 2023

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

MicroStrategy’s ambitious investment strategy in Bitcoin will have proven profitable in 2023.

The company’s stock, MSTR, has surged by approximately 140% year-to-date (YTD) to reach $350 per share, the highest since September of the previous year. This increase closely follows Bitcoin’s 90% YTD gains; the two assets have maintained a strong positive correlation.

MicroStrategy’s BTC Treasury Strategy and Its Impact on the Stock’s Price

MicroStrategy is a substitute for direct Bitcoin investment for those who cannot access a spot Bitcoin exchange-traded fund (ETF) in the United States. The company has adopted a treasury strategy that includes holding 140,000 BTC, currently valued at $4.26 billion, making it the largest publicly traded company in BTC holdings.

Investors in MSTR base their buying or selling decisions on the same factors that drive the Bitcoin market. Therefore, the stock has followed the upward trend of the BTC price since the beginning of 2023, driven by safe-haven trades because of the U.S. banking crisis and anticipation of the Federal Reserve ending rate hikes.

Pacifica Yield, a financial blogger at Seeking Alpha, stated that the inability of MicroStrategy to purchase Bitcoin with positive cash flows in future quarters as per its strategy would pose a risk. The company could sell its Bitcoin holdings to boost its balance sheet reserves, but it has declared that it will not change its BTC purchasing strategy despite financial stress. Instead, it will employ share dilutions and debt offerings to raise capital for buying BTC.

Revenue isn't what you're making it out to be. If a lemonade stand does $100M in revenue and spends $99,999,999 to generate that revenue, then a $1.00 profit isn't all that amazing.

Microstrategy isnt far from that example. Their expense to generate that revenue leaves them with… pic.twitter.com/ZhA80tWn3J

— Alby (@albyva) April 2, 2023

MicroStrategy recorded a net loss of $193.7 million in Q4 2022, up from $137.5 million a year ago, primarily because of a Bitcoin impairment loss of $197.6 million. Its operating cash flow for the quarter was $18.2 million, compared to a positive cash flow of $3.2 million in the same quarter of the previous year.

The stock price has been on a yearly rally and is currently approaching a resistance range, which is between $320 and $340. This range has a reputation for limiting breakout attempts. In case of a pullback, the stock’s price may decline towards its 50-3D exponential moving average (50-3D EMA), represented by the red wave below $260 by June.

MicroStrategy’s Saylor Integrates Bitcoin Lightning with Work Email Address

Meanwhile, Michael Saylor, the co-founder of MicroStrategy and a prominent advocate of Bitcoin, announced on Twitter that they had integrated the Bitcoin Lightning Network into his corporate email address.

So @MicroStrategy converted my corporate email address into a #Lightning⚡️ address and people keep sending me 21 sats…? pic.twitter.com/FHde6RtA6N

— Michael Saylor⚡️ (@saylor) April 17, 2023

Saylor shared a screenshot with his 3 million followers, revealing that he had received several transactions as Satoshis or “Sats” from other individuals at the email address “saylor@microstrategy.com.”

MicroStrategy has integrated with the Lightning Address protocol, enabling users to link their email address as an “Internet Identifier” instead of using wallet addresses or QR codes. It is still being determined whether they have implemented this feature for all corporate emails within the company.

The Lightning Network, a Bitcoin layer 2 scaling solution, is widely used and can process up to 1 million transactions per second with a base fee of only 1 Satoshi (equivalent to around four cents).