Strategy (MSTR), the largest publicly traded company with significant Bitcoin holdings, recently sold 847,000 shares from May 19 to May 25, raising approximately $348.7 million. This capital was then utilized to purchase an additional 4,020 Bitcoins, increasing the firm’s total Bitcoin holdings to 580,250 BTC. Since 2020, Strategy has been consistently buying Bitcoin, allowing investors to gain exposure to the cryptocurrency without needing to own it directly.
Despite Bitcoin climbing to a historic high exceeding $110,000, MSTR’s stock price has struggled to rise, currently sitting well below its previous peak of $543. This discrepancy has raised alarms among some investors. Markus Thielen from 10x Research has advised a bearish approach on MSTR by suggesting investors buy a $370 put and sell a $300 put, which could yield maximum profits if MSTR’s stock falls to $300 or below. Thielen indicates that this strategy highlights a growing rift between Bitcoin’s bullish performance and the lagging performance of MSTR stock.
Thielen noted that this divergence may signal increased caution among large investors, reminiscent of a similar gap observed prior to Bitcoin’s peak in 2021. Despite the unsettling trend, there’s potential for MSTR. It should be noted that Wall Street analysts currently maintain a “Strong Buy” consensus on MSTR stock, buoyed by 12 buy ratings against one sell rating in the past three months, suggesting a positive outlook. The average price target for MSTR is set at $524.92, indicating a potential upside of around 42%.
The current situation presents both challenges and opportunities for MSTR as it navigates the volatile cryptocurrency landscape. Investors may find it valuable to keep a close eye on market trends, both in Bitcoin and in MSTR’s stock performance.