The Impressive Year-to-Date Performance of MicroStrategy
As we approach the end of 2024, MicroStrategy (MSTR) has been making headlines with its impressive year-to-date performance. With a staggering gain of 546%, its market cap currently stands at an astonishing $99.4 billion. This significant increase is largely attributed to its substantial Bitcoin holdings, which have grown exponentially over the past few months.
The Significance of MicroStrategy’s Bitcoin Reserve
MicroStrategy’s Bitcoin reserve has been a major contributor to its remarkable growth. The organization has added 249,850 BTC in 2024 alone, taking its total tally to an impressive 439,000 BTC. This makes MicroStrategy the largest corporate holder of Bitcoin, surpassing Marathon Digital’s holding of 40,435 BTC by a substantial margin of 985%.
As we delve deeper into the relationship between MicroStrategy’s market cap and Bitcoin prices, it becomes evident that monitoring the price of Bitcoin provides a direct outlook on MSTR’s market cap potential. According to its net asset value (NAV) worksheet, MicroStrategy’s fully diluted market cap is estimated to be $114 billion, with the derived NAV at around $40 billion.
The Impact of Bitcoin Price Movements on MicroStrategy’s Market Cap
Every time the price of Bitcoin moves by $1,000 in either direction, MicroStrategy’s market cap gains approximately $440 million. This highlights the significant impact that Bitcoin prices have on MSTR’s market performance.
To put this into perspective, consider the following:
- With a current market cap of $105.5 billion, Starbucks is a close competitor to MicroStrategy.
- A mere 11% increase in Bitcoin price to $118,810 would allow MicroStrategy’s market cap to surpass that of Starbucks.
Similarly, a 32% uptick to $140,000 per BTC would take MSTR’s market cap ahead of Nike. This assumes that MicroStrategy does not add to its current BTC holdings.
MicroStrategy’s Bitcoin Playbook: A Debt-Based Acquisition
MicroStrategy’s method of buying Bitcoin at higher levels, where the company issues debt and utilizes the proceeds to buy more Bitcoin, drives up the price of BTC in the process. While this approach has detractors, such as Chainlink advocate Zach Rynes, who expressed his discomfort with the organization’s ‘debt-based acquisition,’ others like Ki-Young Ju, CEO of CryptoQuant, argue that MicroStrategy’s strategy would only fail if a natural catastrophic event occurred.
In an X post, Ju said: "MicroStrategy only goes bankrupt if an asteroid hits Earth. For 15 years, #Bitcoin has never dropped below the cost basis of long-term whales, which currently stands at $30K."
Ju added that MicroStrategy’s ‘debt’ was not an immediate concern since it is currently only $7 billion, compared to its BTC holdings, which are worth around $47 billion.
Conclusion
In conclusion, MicroStrategy’s Bitcoin holdings have been a major driver of its impressive year-to-date performance. With its market cap on the brink of breaking the $100 billion threshold, MSTR is poised to surpass several major American companies if Bitcoin hits higher price targets. As we continue to monitor the price movements of BTC and their impact on MSTR’s market cap, one thing is clear: MicroStrategy’s success is deeply intertwined with the performance of Bitcoin.
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Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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