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MicroStrategy, the Michael Saylor-co-founded business intelligence software giant that is also the largest corporate holder of Bitcoin, has seen its stock price go through the roof in recent weeks and months.
As such, MSTR has outperformed the largest US stock market indexes by a significant margin, quite possibly due to its massive exposure to Bitcoin.
MSTR Outperforms S&P 500
It has been two months since the start of the year, and the US financial markets are showing some promising results. The S&P 500 – perhaps the best-known index tracking the performance of the 500 largest publicly traded companies in the States – has gained just over 8% and sits at an ATH of over 5,100.
The Dow Jones Industrial Average is also up YTD by 3.6% as of Friday’s closing price. The Nasdaq Composite, which follows the biggest technological firms, has increased by just over 1% within the same timeframe.
However, MicroStrategy, which is listed on the Nasdaq, has been at the forefront of gains for the index. In fact, MSTR has soared by more than 50% since the start of the year and flew past $1,000 at the end of last week. Consequently, MicroStrategy’s stock is close to its all-time high of $1,300, which it recorded in February 2021.
Is Bitcoin to Blame?
This sharp contrast between the performance of MicroStrategy and most other US-based stocks is likely related to the largest cryptocurrency by market cap. The business intelligence giant undertook a somewhat surprising and controversial financial strategy back in August 2020 when it put Bitcoin on its balance sheet.
It began with a few multi-million dollar purchases. The accumulation spree intensified in the next three and a half years as the market conditions didn’t impact the company’s policy. Just the opposite, Saylor, who eventually stepped down as CEO and focused more on Bitcoin, kept defending the asset even as it plummeted from $69,000 to under $20,000 in a year or so.
MicroStrategy kept buying, and its total stash grew to a mindblowing number of 193,000 BTC as of the most recent update. The firm spent just over $6 billion to acquire this digital fortune, but the recent increase in BTC’s value means that MicroStrategy now stands on a massive unrealized profit of $6 billion. Essentially, the company’s Bitcoin position has doubled in just over three years, showing the power of dollar-cost-averaging.
Being the company with the biggest direct exposure to Bitcoin, it’s safe to assume that its own stock moves similarly to BTC, which is arguably the reason behind MSTR’s recent multi-year peak.
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