by Rushali 
With the bullish rally of BTC, MicroStrategy’s stock is also following the same path. MSTR stock is up 113.27% from $289.45 to $617.31 since Dec 8, 2020, when Citigroup, one of the largest banks in the world, downgraded MSTR.
Whereas, the Citigroup stock has declined slightly by 0.63%, from $58.36 to $57.99.
Now, the question is why MSTR is following bitcoin’s path?
The answer is MicroStrategy has been investing its treasury holdings in Bitcoin, making BTC is treasury reserve asset. Currently, the firm is the largest public company holder with over 70K BTC worth roughly $2.4 billion at today’s prices.
On Dec. 9, 2020, MicroStrategy announced raising $550 million in capital from convertible bonds. In an official statement, the company had said that it intends to invest in Bitcoin with the proceeds of the bond. The statement was:
“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes.”
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At that time, Citigroup had given it a sell rating, saying that the policy is impressive but the market is overpricing the core business of the firm.
Citigroup analyst Tyler Radke said;
“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin.”
And from Dec 2020, BTC is seeing a bullish rally. BTC saw a rally of over 100% in the last month of the year.
In just December, Bitcoin rallied from $18,319 to over $42,000 on Binance, outperforming most assets in both the stock market and the crypto market.
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The future of MSTR’s stock will see a bullish rally as long as BTC is following a bullish path.
Michael Saylor, the CEO of MicroStrategy, remains fully confident in the company’s position on Bitcoin, and often buying the price dips. In the fourth quarter financial results for 2020, Saylor wrote:
“Going forward, we continue to plan to hold our bitcoin and invest additional excess cash flows in bitcoin. Additionally, we will explore various approaches to acquire additional bitcoin as part of our overall corporate strategy.”
