MicroStrategy, a U.S. software company renowned for its substantial Bitcoin holdings, is facing potential challenges as its stock trades approximately 300% above its Bitcoin assets. Recent insights from Steno Research indicate that this elevated valuation is unlikely to endure. Factors such as the company’s recent stock split and the expected introduction of Bitcoin exchange-traded funds (ETFs) might diminish investor interest in MicroStrategy shares.
How Does the Stock Split Affect Demand?
Mads Eberhardt from Steno Research has observed a decline in the impact of MicroStrategy’s recent 10-for-1 stock split. During the bullish market of 2021, the company’s stock premium was under 200%, making the ongoing 300% premium appear misaligned with the company’s actual assets and core business fundamentals. Despite a temporary surge post-split, experts suggest that maintaining this premium is unsustainable.
Could ETFs Replace MicroStrategy Shares?
With the recent rollout of options for spot Bitcoin ETFs in the U.S., many investors may begin to favor these direct investments over MicroStrategy shares. As institutional interest in Bitcoin increases, direct cryptocurrency investments are becoming more appealing. Furthermore, any positive regulatory changes in the U.S. regarding Bitcoin could further tilt investor preference towards spot Bitcoin ETFs.
Key Takeaways:
- MicroStrategy’s stock premium of 300% is viewed as unrealistic.
- The impact from the stock split is weakening.
- Institutional interest is shifting towards direct Bitcoin investments and ETFs.
- Regulatory developments could accelerate this trend.
At present, Bitcoin is valued at $68,714, reflecting a 2.37% rise over the past day, while MicroStrategy shares (MSTR) are set to commence the new trading week at $234.34.
