MicroStrategy Stock Price Gains Mirror Bitcoin Price

MicroStrategy’s ambitious Bitcoin investment strategy will have proven profitable by 2023.

Shares of the company, MSTR, have risen approximately 140% year-to-date (YTD) to reach $350 per share, the highest level since September of the previous year. This rise closely tracks Bitcoin’s 90% YTD gains; the two assets have maintained a strong positive correlation.

MicroStrategy’s BTC Treasury Strategy and Its Impact on Stock Price

MicroStrategy is a direct Bitcoin investment substitute for those who cannot access a spot Bitcoin exchange-traded fund (ETF) in the United States. The company has adopted a treasury strategy that includes holding 140,000 BTC, currently valued at $4.26 billion, making it the largest publicly traded company in BTC holdings.

Investors in MSTR base their buy or sell decisions on the same factors that drive the Bitcoin market. Therefore, the action has followed the upward trend of the BTC price since early 2023, fueled by safe-haven operations due to the US banking crisis and anticipation that the Federal Reserve will end rate hikes.

Pacifica Yield, a financial blogger at Seeking Alpha, stated that MicroStrategy’s inability to buy cash-flow-positive Bitcoin in upcoming quarters based on its strategy would pose a risk. The company could sell its Bitcoin holdings to increase its balance sheet reserves, but has stated that it will not change its BTC buying strategy despite financial stress. Instead, it will employ equity dilutions and debt offerings to raise capital to buy BTC.

Income is not what you pretend it to be. If a lemonade stand generates $100 million in revenue and you spend $99,999,999 to generate that revenue, then a profit of $1.00 isn’t all that surprising.

Microstrategy is not far from that example. Their spending to generate that income leaves them with… pic.twitter.com/ZhA80tWn3J

-Alby (@albyva) April 2, 2023

MicroStrategy posted a net loss of $193.7 million in Q4 2022, up from $137.5 million a year ago, primarily due to a $197.6 million Bitcoin impairment loss. Its operating cash flow for the quarter was $18.2 million, compared to a positive cash flow of $3.2 million in the same quarter of the prior year.

The stock price has been on a yearly rally and is currently nearing a resistance range, which is between $320 and $340. This range has a reputation for limiting breakout attempts. In the event of a pullback, the share price may fall towards its 50-3D exponential moving average (50-3D EMA), represented by the red wave below $260 in June.

MicroStrategy’s Saylor Integrates Bitcoin Lightning With Work Email Address

Meanwhile, Michael Saylor, co-founder of MicroStrategy and a prominent Bitcoin advocate, announced on Twitter that they have integrated the Bitcoin Lightning Network into their corporate email address.

So @MicroStrategy I converted my corporate email address to a #Lightning⚡️ the address and people keep sending me 21 sats…🧡 pic.twitter.com/FHde6RtA6N

—Michael Saylor⚡️ (@saylor) April 17, 2023

Saylor shared a screenshot with his 3 million followers, revealing that he had received various transactions such as Satoshis or “Sats” from other people at the “[email protected]” email address.

MicroStrategy has integrated with the Lightning Address protocol, allowing users to link their email address as an “Internet Identifier” instead of using wallet addresses or QR codes. Whether they have implemented this feature for all corporate email within the company is still being determined.

A Bitcoin Layer 2 scaling solution, the Lightning Network is widely used and can process up to 1 million transactions per second with a base fee of just 1 Satoshi (equivalent to around four cents).

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