The business software company MicroStrategy (MSTR), which holds a large amount of Bitcoin, saw its stock price plummet over 8% on Monday, closing at $302.96 per share. Since the company was included in the NASDAQ 100 Index, its stock price has dropped about 30%, and it has fallen more than 40% from the record high set at the end of November.
This company, which was originally relatively unknown but has transformed into the publicly traded company with the most Bitcoin worldwide, is now showing some significant short-term signs of a peak.
One of these signals is the skyrocketing stock price, which reached a peak of $543 per share at the end of November, marking an almost 8-fold increase in 2024; since the company began buying Bitcoin in August 2020, it has surged more than 50 times.
Another signal is that founder and Executive Chairman Michael Saylor has become a frequent guest in financial media, podcasts, and social media shows this year.
Michael Saylor continuously promotes the key performance indicator invented by MicroStrategy called 'Bitcoin Yield', reminiscent of the internet bubble indicators created at the end of the 1990s, such as page views. MicroStrategy has raised a substantial amount of funds through extensive stock issuance and convertible bonds, and by the end of 2024 has 'developed a habit' of hinting at increasing Bitcoin holdings every Sunday before officially submitting regulatory documents on Monday.
Now, several other companies have begun to follow suit. Although Michael Saylor's strategy of turning Bitcoin into a corporate reserve asset has been successful for many years, few companies have followed, aside from Tesla led by Elon Musk and Block led by Jack Dorsey; however, this situation has changed significantly in 2024, with small medical equipment manufacturer Semler Scientific, Japan's Metaplanet, which started by operating hotels, and some Bitcoin miners embracing Michael Saylor's ideas, and each announcement of fundraising and Bitcoin purchases has garnered Michael Saylor's praise on social media.
However, according to the late economist Herb Stein's description of government budgets and trade deficits, if something cannot continue forever, it will eventually stop. Although MicroStrategy seems to have discovered a virtuous cycle in 2024, if it cannot be sustained, it will face a bubble, and this law clearly also applies to MicroStrategy's stock.
After MicroStrategy announced its inclusion in the NASDAQ 100 Index on December 14, the stock price was around $430, but it plummeted about 30% in just two weeks.
Looking back even further, three weeks prior, MicroStrategy's bubble had already shown 'cracks', with the stock price reaching a new high of about $543 on November 21. Currently, MicroStrategy's stock price is $302.96 per share, having fallen 45% from its peak in just 5 weeks.
Nevertheless, despite the pullback, this stock has still seen an increase of over 400% year-to-date, rising about 20 times compared to when the company began buying Bitcoin in August 2020.
"Since being included in the NASDAQ 100 Index, the stock has plummeted about 30%! Is MicroStrategy's 'decline instead of rise' indicative of a bubble?" This article was first published on (Blockcast).
