“Bitcoin Buying Strategies Are Fueling Stock Prices — Is This a New Michael Saylor Moment, or Just a Passing Fad Like Long Island Iced Tea?”

As Bitcoin continues its upward trajectory, a growing number of companies are attempting to replicate MicroStrategy’s strategy of accumulating the cryptocurrency. Will this trend lead to similar success—or will it fizzle out?

In the wake of Bitcoin’s price surge this month, at least 12 publicly traded companies, ranging from fitness equipment manufacturers to biopharma firms, have announced plans to add Bitcoin to their corporate treasuries. This follows in the footsteps of MicroStrategy, a software company that turned its focus to Bitcoin under the leadership of CEO Michael Saylor starting in 2020. Saylor’s company has become a significant player in the Bitcoin space, amassing roughly $38 billion in Bitcoin, which has helped drive its stock price up by about 30 times since it began its purchases.

Other companies are now trying to replicate MicroStrategy’s success. For example, Anixa Biosciences, a biotech company, saw its stock price jump 19% after announcing its decision to buy Bitcoin. Similarly, Interactive Strength, a fitness equipment company, experienced an 80% surge in its stock price after revealing a $5 million Bitcoin purchase plan. While these companies have experienced brief surges, the long-term effects remain unclear, with some rallies fading by the end of the day.

While the rush to add Bitcoin is seen as a sign of confidence in the cryptocurrency, some analysts caution that the trend could be unsustainable. “This behavior could end the same way as previous bull markets: unsustainable hype followed by sharp corrections,” said Youwei Yang, Chief Economist at BIT Mining. Furthermore, while many companies have expressed their intention to purchase Bitcoin, few have actually done so, with only Genius Group confirming a purchase to date.

The broader trend mirrors the “blockchain” mania of the late 2010s, where companies added the term “blockchain” to their names in an attempt to capitalize on the cryptocurrency hype. While this initially led to price surges, many of these gains proved unsustainable. In the 2021 crypto bull market, companies linked to Web3, metaverse, and NFTs enjoyed similar bursts of attention, only to see their fortunes fade as the market turned bearish.

For companies like MicroStrategy, the Bitcoin buying strategy has worked—at least so far. MicroStrategy has raised capital through stock and debt offerings to fund its Bitcoin purchases, and it has found success in doing so. However, analysts warn that smaller companies may face difficulties, with some seeing the strategy as a short-term gimmick rather than a sustainable business model. “For microcaps, it risks being seen as a short-term gimmick, deterring serious investors,” said Youwei Yang.

While the approach may lead to short-term stock gains, it also carries substantial risks, especially for companies using leverage to fund Bitcoin purchases. “Leverage amplifies potential losses during market corrections, underscoring its inherent danger,” said David Siemer, CEO of Wave Digital Assets.

In the end, the wave of companies announcing Bitcoin buying plans continues to grow. Whether these new entrants will achieve the same level of success as MicroStrategy remains to be seen. It’s clear that, in today’s crypto market, announcing a Bitcoin strategy can still send stocks soaring—at least for now. But as the market evolves, companies will have to prove that their Bitcoin investments are more than just a speculative trend.