MicroStrategy stock sees impressive surge as Bitcoin maintains bull run

On March 4th, the early trading hours in the United States saw MicroStrategy’s (MSTR) stock price jump more than 20%, holding a strong gain of over 15% by noon. This company, known for its huge investments in Bitcoin, saw its shares soar from a previous close of $1,079 on March 3 to an opening price of $1,200 the following day, peaking at $1,339 midday.

Andrew Kang, co-founder of Mechanism Capital, highlighted that roughly 20% of MicroStrategy’s publicly available shares, valued at around $3 billion, were tied up in short positions. He said that most of the people in this category were standard investors who were looking to make money off of the difference between the stock’s market value and its net asset value. They were hoping that the price would drop and take advantage of the situation. Kang cautioned that such a strategy could backfire, potentially triggering a market phenomenon similar to the GameStop frenzy in January 2021, where the stock skyrocketed by 1,500% in two weeks before plummeting.

Amidst this market volatility, MicroStrategy continued to strengthen its Bitcoin portfolio, acquiring an additional 3,000 BTC between February 15 and 25 at an average price of $51,813, totaling $155 million. This purchase increased the company’s Bitcoin holdings to 193,000 BTC, bought at an average price of $31,554, cumulatively costing $6.1 billion. With Bitcoin’s price reaching $66,332 on March 4, the value of MicroStrategy’s holdings soared to $12.8 billion.

The company’s bullish stance on Bitcoin has been well-received by market analysts. Investment banking firm Benchmark, in a report released in February, rated MicroStrategy as a “buy” with a target price of $990, citing the anticipated bullish impact of the upcoming Bitcoin halving on the company’s stock price.

MicroStrategy’s founder and chairman, Michael Saylor, has been vocal about his long-term commitment to Bitcoin, considering it superior to traditional investment assets like gold, real estate, and the S&P 500. At the time of this report, MicroStrategy’s stock was trading at $1,251, marking an impressive increase of almost 16% within the day.

Saylor also discussed the potential for a decade-long institutional “gold rush” towards Bitcoin, propelled by the launch of spot Bitcoin ETFs and the advancement of autonomous AI technologies. Speaking at the Bitcoin Atlantis conference on March 1, he predicted a significant phase of institutional adoption stretching from January 2024 until about November 2034. By 2035, he anticipates that 99% of Bitcoin will have been mined, signaling the start of a new growth phase.

He foresees a future where banks and institutional wirehouses will play a pivotal role in facilitating Bitcoin trades, significantly broadening access to the cryptocurrency. Saylor’s vision includes a scenario where Bitcoin not only surpasses gold in value but also becomes more traded than S&P index ETFs.

Saylor says that the point where Bitcoin and autonomous AI meet will be very important for keeping the internet safe from criminals. He says that in a world run by AI, Bitcoin’s blockchain technology will be needed to prove the authenticity of digital messages and documents. Also, the fact that Bitcoin mining is using less energy means that politicians and environmentalists will likely pay more attention to how much energy AI systems use.

During the discussion, financial expert Lyn Alden and Bitcoin supporter Lawrence Lepard also shared their thoughts. Alden talked about how adopting Bitcoin has changed nation-states by making them financial hubs and creating capital. Some countries have put limits on Bitcoin because they think it poses a threat to their own currencies, but Alden and Lepard pointed out that these actions are pointless because Bitcoin is strong and flexible enough to get around regulation problems. They talked about how usage is growing in places like Nigeria, where peer-to-peer Bitcoin trade has grown a lot even though the government has banned crypto.