On the yearly chart, Bitcoin rose 146% and MicroStrategy gained 599% as more retail investment increased MicroStrategy’s volatility compared to BTC.
MicroStrategy’s market capitalization saw its largest four-day drop in history, sparking questions about its position as a leveraged Bitcoin investment vehicle.
The company’s market value fell by over 35% from its Nov. 21 peak, erasing over $30 billion.
This marked the biggest four-day decline ever for the business intelligence firm, according to the Kobeissi Letter, which highlighted the drop in a Nov. 26 X post:
“MicroStrategy stock, MSTR, just fell a MASSIVE -35% from its peak seen on November 21st. That’s ~$30 BILLION of market cap erased in 4 trading days.”
While MicroStrategy’s stock price has since ticked up slightly, it declined along with this week’s Bitcoin BTC$94,315 correction. MicroStrategy’s price fell 7.5% over the 24 hours leading to 9:52 am UTC on Nov. 27 to trade at $354.10, TradingView data showed.
MicroStrategy: Still a leveraged Bitcoin trade?
The stock’s decline coincided with Bitcoin’s correction after hitting a record high of around $99,800 on Nov. 22.
Still, Bitcoin and MicroStrategy have posted robust gains over a wider timeframe. During the past month, Bitcoin rose 44% while MicroStrategy rallied over 32%. On the yearly chart, Bitcoin rose 146% while MicroStrategy is up by more than 599%.
Numerous investors are looking at MicroStrategy as a leveraged bet on the Bitcoin price that is expected to outperform the returns of the world’s first cryptocurrency.
Still, MicroStrategy’s recent 35% drop — more than four times Bitcoin’s correction — raises concerns about the volatility of its stock as a Bitcoin proxy.
MicroStrategy volatility caused by retail investors
This growing volatility is a function of increasingly more retail traders, according to the Kobeissi letter, which wrote:
“On Wednesday alone last week, retail investors bought ~$42 million worth of MicroStrategy stock, $MSTR. This marked the largest daily retail buy on record and was 8 TIMES higher than the daily average seen in October.”
Retail investors bought nearly $100 million worth of MicroStrategy stock during the past week, with growing interest partly driven by the firm’s $2.6 billion note offering.
Some of the world’s largest traditional institutions are investing in Michael Saylor’s company, including Allianz, the second-largest insurance provider in Europe, which acquired over 24% of MicroStrategy’s $600 million note offering in March.
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