As a seasoned researcher with a keen interest in cryptocurrencies and a knack for deciphering market trends, I find myself intrigued by MicroStrategy’s current situation. Having closely observed the crypto market during its bull runs and bear markets, I can’t help but notice the striking parallels between now and the 2021 bull run.
Based on data from CryptoQuant, it appears that MicroStrategy’s Bitcoin premium has reverted to a level similar to what was observed during the 2021 market surge.
According to CryptoQuant CEO Ki Young Ju, the highest point of the company’s Bitcoin price premium occurred during the height of the 2021 Bitcoin market surge.
Significantly, temperatures didn’t drop below zero during the preceding bear market. To put this into perspective, GBTC was selling at a 48% reduction in price.
On a Friday, MicroStrategy’s (MSTR) stocks saw a jump of $421, this increase being due to a major correction that ensued following the bearish prediction made by Citron Research. In the pre-market trading, the company’s shares have risen an additional 3.11%.
MSTR is trading at a 2.924X premium to net asset value (NAV).
In my research, I’ve observed an intriguing trend: Lenders seem to gravitate towards companies more during periods of economic growth, often referred to as ‘bull markets.’ This is a pattern highlighted by Emil Sandstedt in his work, “Money Dethroned.
In tough economic periods when Bitcoin’s value decreases, its financial stability weakens, prompting potential lenders to seek more favorable terms. On the other hand, during good times, numerous lenders are attracted to the company, often providing access to coins that are close to or at record highs. The risk associated with price fluctuations partially balances out the advantages of premium, as expressed in a recent social media post.
According to U.Today, there has been growing scrutiny of MicroStrategy’s approach, which involves taking advantage of low-cost loan offers. As stated by Lionel Laurent, a columnist for Bloomberg Opinion, this strategy is being called into question as potentially unsustainable.
BitMEX Research has cautioned that MicroStrategy’s high price might eventually drop, potentially turning into a lower cost (discount). They foresee a possible escalation in the risk for MicroStrategy, a Virginia-based business intelligence company, to be compelled to sell Bitcoin if they continue issuing more debt.
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2024-11-25 08:30