On December 30, MicroStrategy (MSTR) disclosed the purchase of $209 million in Bitcoin (BTC), after which its stock price fell more than 8%. Despite a significant increase over the year, the recent strategy of buying Bitcoin for eight consecutive weeks has raised market concerns about its leverage risks.

Market Reaction
On that day, MSTR's stock price fell from $318.89 to $302.09 within an hour of opening on Nasdaq, a drop of 5.3%. The closing price was reported at $302.96, and after-hours trading further declined to $293.59. MicroStrategy raised funds for this purchase by issuing 592,987 shares.

'Super Bitcoinization' Strategy
MicroStrategy's Bitcoin holdings have increased to 194,180 BTC since October 31. Market analysts point out that MSTR's high leverage strategy relies on continuous issuance of stocks and bonds. This week, MSTR proposed to increase its authorized capital from 330 million to 10.33 billion, raising greater concerns.

Trading analysis firm Kobeissi Letter commented that this plan puts the company in a 'lose-lose' situation:

  • If it cannot continue to issue bonds or increase shares, its coin purchasing plan will be difficult to sustain;

  • The risks of high leverage may lead to a financial crisis.

Felix Hartmann, founder of Hartmann Capital, further predicts that MSTR's stock price may experience polarization:

  • In a bull market, the company may significantly profit from the rising price of Bitcoin;

  • However, in the long term, if the market experiences significant fluctuations, the company faces the possibility of bankruptcy.

Market Position and Controversy
Joe Burnett, the head of market research at Unchained, described MSTR's strategy as 'super Bitcoinization', relying on premium trading to achieve a cycle of 'buy coins - appreciate - reduce leverage'. He believes that this model has increased the price of bitcoin per share, but risks are also accumulating.

It is worth noting that on December 23, MicroStrategy was included in the Nasdaq 100 Index, becoming one of the 100 companies with the highest market capitalization on Nasdaq, further enhancing its market visibility.

Will MSTR's 'super Bitcoinization' succeed in the future? How will the trends in the Bitcoin market affect this strategy? Follow Uncle Zhao to discuss the secrets behind the market!