Investors are pondering the next move for MicroStrategy’s shares after a 343% surge this year, with analysis by 10x Research, led by Markus Thielen, highlighting the stock’s overvaluation in tandem with Bitcoin‘s impressive rally. The firm’s regression model suggests that MicroStrategy’s shares are priced 26% higher than they should be, based on the relationship between the company’s stock and Bitcoin’s spot price.
10x Research’s comprehensive analysis indicates that MicroStrategy’s shares show a 26% overpricing and a 20% positive divergence compared to Bitcoin’s current price, suggesting that it might be time for shareholders to take profits. The software company’s shares have seen an approximate sevenfold increase this year, becoming one of the best-performing crypto-related stocks, reaching a 25-month high of $673 on December 27th.
MicroStrategy, the largest corporate Bitcoin investor, began accumulating Bitcoin as a reserve asset three years ago and now holds over 189,150 BTC. The leading cryptocurrency has surged 160% since the beginning of the year, with a significant 60% rise in the last quarter, particularly influenced by the narrative around spot ETFs.
The overvaluation of MicroStrategy’s shares is evident from 10x Research’s graph, which displays an upward-sloping line indicating the optimal price level for the shares. The line’s position, with nearly equal points above and below, suggests a clear positive correlation between Bitcoin’s price and MicroStrategy’s stock value.
The upward slope of the line on the distribution graph reflects a positive relationship between Bitcoin’s price and MicroStrategy’s shares. The R-squared value of 0.8232 indicates that 80% of the variation in MicroStrategy’s stock price can be explained by changes in Bitcoin’s price.
According to 10x Research, MicroStrategy’s shares, which closed the last trading session at $673, are deemed 20% more expensive when considering Bitcoin’s price around $43,000.