Microstrategy shares are rising rapidly as Bitcoin outperforms real estate, gold, and bonds in returns.
Microstrategy's CEO (Nasdaq: MSTR) Michael Saylor shared a chart on Thursday illustrating the dynamics of Microstrategy's shares against other major investments.
Since adopting the Bitcoin strategy on August 10, 2020, the company has achieved an annual return of 124%, outperforming all major asset classes.
Factset data from December 11 shows that Bitcoin yields a stable profit of 64% annually over the same period. In comparison, the stocks of the 'Magnificent Seven' (Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) grew by 31%, the S&P 500 index by 15%, real estate by 10%, and gold by 7%.
Bonds showed a negative yield of 5%. This clearly highlights the advantage of Bitcoin-based strategies over traditional growth-oriented investments.
Microstrategy has been actively accumulating Bitcoins, gathering about 423,650 BTC. Many investors are attracted to the company due to its significant Bitcoin holdings, which have contributed to a substantial increase in MSTR shares, especially after the recent rise in Bitcoin's price above 100,000 dollars.
The company plans to raise another $42 billion through equity and debt financing to further increase its Bitcoin assets. Since the beginning of the year, Microstrategy shares have risen by approximately 500%, significantly exceeding the 28% increase of the S&P 500 index, and the company is already preparing to enter the Nasdaq 100.
However, this strategy is associated with risks, including potential declines in stock value if Bitcoin's value decreases and challenges in maintaining a high market premium.
Despite these issues, investors are attracted by the high volatility of MSTR, as well as its potentially high returns, and they view it as a leveraged bet on the market trajectory of Bitcoin.
Recently, Saylor made ambitious forecasts regarding the future of Bitcoin. In July, he suggested that by 2045, the price of Bitcoin could reach 13 million dollars per coin, based on an annual growth of 29%.
His forecasts include a conservative estimate of 3 million dollars and an optimistic forecast of 49 million dollars. He explains this growth by the limited supply of Bitcoin and its higher yield compared to traditional assets.
A phenomenal phenomenon. You create a company, conduct an initial public offering, spend all the capital, plus borrowed funds on buying Bitcoin, and the shares grow 5 times faster than Bitcoin.
This 1 to 5 ratio shows that even the degree of madness accumulated in the stock market pales in comparison to the potential returns of Bitcoin. Although in reality, considering all the assets related to the stock market, including first and second order derivatives, the stock market has long passed the point of no return of all historically known Ponzi schemes.