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MicroStrategy shares plunged 20% in 48 hours following Bitcoin ETF approval

MicroStrategy shares plunged 20% in 48 hours following Bitcoin ETF approval
Vinicius Barbosa

MicroStrategy Inc. (NASDAQ: MSTR) suffered a tough hit following the Bitcoin spot ETF approval on January 10. Deemed as an indirect exposure to Bitcoin (BTC), Michael Saylor’s company now faces powerful Wall Street competitors.

In a sequence of events, the SEC finally approved 11 ETFs for the leading cryptocurrency. In response, BTC traded as high as $48,965 a day after, but MSTR did not follow.

Notably, MicroStrategy stock has directly correlated to Bitcoin’s price since Michael Saylor started accumulating BTC in his company’s treasury. However, this trend shifted by the start of 2024, although MSTR slightly outperformed Bitcoin in 2023.

MicroStrategy peaked at $727.77 per share on Wall Street’s first trading day of the year and dropped. Its most notable losses only started on January 11, the first trading day for Bitcoin ETFs. MSTR opened the day at $589.99 and closed January 12 at $485.53 per share – with 19% losses in 48 hours.

MicroStrategy (NASDAQ: MSTR) daily chart vs. Bitcoin (BTC). Source: TradingView

MicroStrategy holds more in Bitcoin than its capitalization

Interestingly, Michael Saylor’s business intelligence company holds 189,150 BTC in its treasury. These holdings are currently worth $8.09 billion, while MicroStrategy is a $6.64 billion market cap endeavor.

Saylor started purchasing Bitcoin under MicroStrategy’s name on August 11, 2020, spending $250 million in 21,454 BTC. Since then, MSTR has acquired 189,150 BTC holdings at an average price of $29,582 per Bitcoin.

Considering a reported total cost of $4.68 billion, it has an unrealized profit of $3.41 billion, up 72.8%.

All things considered, investing in MSTR is not only an indirect exposure to Bitcoin’s volatility but also in its business. This brings risks and opportunities for its shareholders, who can hedge their position in a diversified way.

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