MicroStrategy Sees 16% Decline Even as Bitcoin Hits New Record, Raising Questions About Its Worth

MicroStrategy’s stock has faced a significant pullback of 16.2% on Thursday, despite Bitcoin (BTC) soaring to a new record high near $100,000. The company’s valuation, which had topped $100 billion earlier in the week, now stands at around $80 billion after the drop. This sharp decline comes even though Bitcoin continues to hit new milestones, boosting the crypto market to record highs.

MicroStrategy, which holds over 331,000 Bitcoin, has seen its market cap become increasingly disconnected from the value of its Bitcoin reserves, with its valuation more than three times the current value of the BTC it holds. Analysts like Andrew Left of Citron Research have expressed concern about this gap. Left, who had previously recommended buying MicroStrategy to gain exposure to Bitcoin, now sees the stock as overvalued, though he remains bullish on Bitcoin itself.

The surge in MicroStrategy’s stock has been fueled by its Bitcoin holdings, creating a cycle where rising Bitcoin prices further elevate the company’s market cap, enabling it to acquire more Bitcoin. However, some market watchers, like technician Bracco, have pointed out the stock’s “parabolic” rise, warning that it may be overextended. As MicroStrategy’s stock climbs, it has also sparked discussions about whether this movement reflects broader market inefficiencies, with some suggesting that purchasing Bitcoin directly could be a more rational strategy than investing in the company’s stock.

While MicroStrategy’s stock has seen a dramatic increase this year—up over fivefold in 2024 alone—its rapid rise has raised red flags for some investors, suggesting that it may be becoming increasingly detached from Bitcoin’s actual market value. As the company continues to buy Bitcoin, the stock’s price remains tied to the cryptocurrency’s volatility, making it a riskier bet for those looking to profit from Bitcoin’s success.