Here’s Why MicroStrategy (MSTR) Is Not A Bubble

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As a seasoned analyst with over two decades of experience navigating the volatile waters of Wall Street, I find myself cautiously optimistic about MicroStrategy (MSTR). While the staggering 515% rally this year has raised eyebrows and concerns about a potential bubble, I believe that MSTR is not in a speculative bubble but rather a strategic play by Michael Saylor.

There’s been much discussion lately about whether MicroStrategy’s meteoric 515% rise in stock price this year indicates a potential bubble. The concern heightens when considering that MicroStrategy’s stock value is significantly higher, by approximately 195%, than the value of its Bitcoin holdings, raising fears that a sudden collapse could occur imminently.

MicroStrategy (MSTR) Is Not A Bubble

Last week, MicroStrategy (MSTR) significantly outperformed on Wall Street, surpassing a staggering $136 billion in trading volume. This impressive feat overshadowed the heavyweights from the “Magnificent 7” group. Even GameStop (GME) during its intense surge in the 2021 bull run didn’t come close to this level of trading activity, as pointed out by The Kobeissi Letter.

Presently, the value of MSTR is at 2.95 times its worth, which represents a significant 195% premium over its Bitcoin holdings. This is the highest Bitcoin holding premium the company has seen since the 2021 bull market. Despite a massive 515% surge in MSTR stock so far this year, investors are still uncertain about future developments. It’s worth mentioning that MicroStrategy recently bought 51,780 BTC for an impressive investment exceeding $4 billion within the last week.

In simpler terms, MicroStrategy (MSTR) serves as a worldwide representative for investing in Bitcoin. By taking out loans to buy more Bitcoin, it follows a straightforward strategy that fuels additional Bitcoin purchases with the funds raised. This results in a self-sustaining cycle where rising Bitcoin prices encourage increased investment and borrowing.

As a dedicated crypto investor like Fred Kruger, I’ve come to realize the significant role restrictive global regulations have played in MicroStrategy’s (MSTR) success. These stringent rules make it challenging for many investors to access Bitcoin and cryptocurrency Exchange-Traded Funds (ETFs) directly in various regions. As a result, we are left with no choice but to explore alternatives such as investing in companies like MSTR that have substantial bitcoin holdings on their balance sheets.

According to Kruger’s latest remarks, British residents and investors in nations like Singapore and South Korea encounter substantial hurdles when it comes to buying Bitcoin ETFs. In contrast, significant financial institutions in the U.S., such as Goldman Sachs, Merrill Lynch, and Morgan Stanley, are hampered by banking rules, which restrict their capacity to provide crypto ETFs directly.

Furthermore, many 401(k) retirement plans in the U.S. generally don’t allow for Exchanged Traded Fund (ETF) investments, which adds to the complexity when it comes to investing options for individual investors.

In this regulatory context, Kruger pointed out that purchasing MicroStrategy (MSTR) shares at a premium serves as the sole viable option for investors seeking an equivalent investment in Bitcoin.

This weekend, Saylor holds total control over the market. He’s skilled enough to manipulate the market trends. He can execute sell orders using high levels of borrowed capital. He can be patient. He can buy gradually. Or he can swiftly overwhelm you. The one with the financial resources ultimately dictates the market rules.

Michael Saylor Has Effectively Managed Debt

Some contend that buying MSTR is essentially overpaying for a share of Bitcoin ownership. Countering this viewpoint, Michael Saylor likens the assessment of MSTR to appraising oil companies based solely on their oil reserves. He clarifies that just as crude oil is refined into gasoline, MSTR enhances Bitcoin’s value through its strategic business activities, much like how refining transforms raw oil into usable fuel.

In simpler terms, Ki Young Ju, CEO of Cryptoquant, points out that during the previous bear market, their Bitcoin holdings never fell below zero in value, which means they were always profitable. Conversely, the Grayscale Bitcoin Trust (GBTC), now functioning as a Bitcoin ETF, saw a significant drop, reaching -48%, or a 48% discount. This substantial decrease led to a financial crisis by causing the unwinding of leveraged positions.

As a crypto investor, I’ve observed that even in the tumultuous 2022 bear market, MicroStrategy, under the guidance of Michael Saylor, skillfully navigated Bitcoin market risks and upheld its stability, thanks to our high exposure to cryptocurrency. His savvy use of leverage served as a roadmap for managing turbulent crypto markets. Moreover, he hinted that his strategy would involve purchasing even more Bitcoins in the future.

We need more green dots on .

— Michael Saylor (@saylor) November 24, 2024

Last week, MicroStrategy wrapped up its $3 billion offering for convertible notes with no interest rate. The value of these notes is set at $672, which represents a 55% premium over the current price of MSTR shares. In other words, investors can only make a profit if MSTR’s stock rises above $672.

On Monday morning, it’s anticipated that Saylor will declare a further $3 billion investment in Bitcoin. Notable figures like Robert Kiyosaki have commended this decision. Furthermore, Mike Investing suggests that the MicroStrategy excitement on Wall Street could persist throughout this week, potentially pushing the stock price over $700.

This week will make many millionaires.

If you own $MSTR this week might be one of the most exciting and profitable weeks in your lifetime.

If Michael Saylor declares on Monday that he has purchased 100,000 bitcoins ($BTC), it’s likely that MicroStrategy (MSTR) stock could reach or surpass the $700 mark by Thanksgiving.

Be prepared…

— Mike Investing (@MrMikeInvesting) November 25, 2024

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2024-11-25 09:06