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shares of Micro Strategy Co., Ltd. (NASDAQ:MSTR) fell more than 8.5% on Monday, a tough debut for the early tenure. in the Nasdaq 100.
Software companies and top companies Bitcoin (cipher: BTC) holders have struggled recently, posting their fifth loss in the past six sessions and dropping more than 37% from last month’s all-time high.
Why is MicroStrategy declining?
On Monday, MicroStrategy announced that it sold $561 million in common stock and purchased an additional 5,262 Bitcoins at an average price of $106,662 per coin. This brings the company’s total Bitcoin holdings to an astonishing 444,262 BTC.
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But both the size and timing of the acquisition raised eyebrows among traders and analysts.
Recent Bitcoin purchases michael saylorIt’s the smallest yet. This is in contrast to the bold and expensive acquisitions that have defined his crypto strategy thus far.
The average price paid for a new Bitcoin stash is about 12% higher than current levels. What’s more, this price exceeds the December 17th record closing price of $106,151 per Bitcoin, an unusual move for a company known for strategically buying the market.
Critics did not hold back. peter schiffMr. Saylor, a well-known Bitcoin skeptic, attacked Mr. Saylor on X, saying:
“We seem to be lacking the firepower to keep Bitcoin afloat. Moreover, this is not only the smallest purchase, but also the first time the average purchase price exceeded the market price on Monday when we disclosed the purchase. ”
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Meanwhile, market reaction reflected growing anxiety.
“$MSTR continues to look pretty heavy,” wrote X account Markets & Mayhem. “The ‘infinite funds glitch’ isn’t really a glitch at all; it’s just replacing a failing core SaaS business with something that’s hot today.” Hey speculators who love high beta. ”
A dangerous game with leverage
MicroStrategy’s deep connection to Bitcoin is both its crown jewel and its Achilles heel. The company, which holds $41 billion worth of Bitcoin on its balance sheet as of December 2024, is closely connected to the volatile movements of the virtual currency market.
However, the latest acquisition signals a crack in the company’s strategy. Not only was this one of the smallest Bitcoin purchases in recent years, it also signals that MicroStrategy may be overextending itself as Bitcoin prices slump. .
Adding to investors’ concerns is MicroStrategy’s shift away from its core software business. The company has been leaning heavily into Bitcoin speculation, raising questions about its ability to generate sustainable cash flow from its core business.
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What’s next for MSTR?
MicroStrategy remains popular among Bitcoin bulls, but its recent stock performance has shown some caution. Despite Bitcoin trading at nearly $100,000, the company has lost nearly 40% of its value in just over a month.
The broader listing on the Nasdaq 100 was supposed to be a moment of validation for MicroStrategy, but instead ended up highlighting the risks of overly concentrated bets on cryptocurrencies.
As 2024 draws to a close, attention will be focused on the price trend of Bitcoin. If cryptocurrencies fail to regain upward momentum, MicroStrategy’s high-stakes game could face increasing pressure.
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This article MicroStrategy sinks after being included in Nasdaq 100: Is Bitcoin betting under fire? originally appeared Benzinga.com
