Shares of MicroStrategy Inc. surged towards a 24-year high on Monday fueled by the recent rapid run-up in bitcoin prices to near-record levels.
Digital-Asset Play
A business-analytics software company at heart, investors have treated MicroStrategy’s stock as more of a digital-asset play, given that it has for years been building its bitcoin pile as its primary treasury asset.
Impressive Growth
The stock shot up 24% in afternoon trading, putting it on track for the highest close since March 2000. It has rocketed 92% amid a six-day winning streak, marking the longest winning streak since 2023.
Market Capitalization Increase
The company’s market capitalization has swelled by $10.7 billion over the past six sessions to reach $22.4 billion on Monday.
Bullish Analyst Predictions
Last week, Benchmark analyst Mark Palmer became the biggest bull on MicroStrategy’s stock, initiating coverage with a buy rating and a $990 price target. Palmer’s target was based on his assumption that bitcoin will reach $125,000 at the end of 2025.
Bitcoin’s Rally
Bitcoin was recently trading up 6.9% at $67,334 according to FactSet, just below its record of $68,990 reached a little more than two years ago. The cryptocurrency has soared 60.4% year-to-date following the approval of several spot bitcoin exchange-traded funds by regulators.
Conclusion
MicroStrategy Inc.’s impressive surge in stock value reflects the increasing interest in digital assets, particularly bitcoin, as the company continues to see significant growth and market capitalization expansion in tandem with the cryptocurrency’s rally.
MicroStrategy’s Latest Bitcoin Holdings Update
In their most recent update, MicroStrategy revealed that they spent $155.4 million to acquire 3,000 bitcoins in a 10-day period until Feb. 25th, at an average price of $51,813 per bitcoin. The value of these holdings has already increased by approximately $46.6 million based on current bitcoin prices.
Total Bitcoin Holdings
As of February 25th, MicroStrategy reported holding around 193,000 bitcoins, acquired for about $6.09 billion at an average price of $31,544 per bitcoin. At present prices, these holdings would be valued at approximately $13 billion.
Bitcoin as an Institutional Asset
During MicroStrategy’s post-earnings call with analysts in early February, co-founder and Executive Chairman Michael Saylor expressed his belief that the year 2024 marks the “birth” of bitcoin as an institutional-grade asset class. He emphasized the transition from the initial phase of bitcoin as an unregulated retail asset to potentially becoming a regulated institutional asset over the next 15 years.
Correlation Data
MicroStrategy’s stock has shown a correlation coefficient of 0.95 with bitcoin over the past year, indicating a strong relationship between the two assets. A coefficient of 1.00 would suggest a perfect correlation in their movements.
In comparison, the correlation between MicroStrategy’s stock and the SPDR S&P Software & Services ETF XSW, in which the company’s stock is a component, has been calculated at 0.80.