MicroStrategy's market capitalization recorded the most significant drop in the past four days, raising many questions about its position as a leveraged Bitcoin investment vehicle.
The market value of this company has dropped by more than 35% since the peak on November 21, wiping out more than 30 billion USD.
This is the largest drop in four days ever for the data analytics company, according to a report by the Kobeissi Letter in a post on X on November 26:
"MicroStrategy stock, MSTR, just plummeted an ASTOUNDING -35% from the peak on November 21. That's ~30 billion USD in market cap wiped out in 4 trading days."
MSTR/USD, 1-day chart. Source: TinTucBitcoin/TradingView
Although the stock price of MicroStrategy has increased, it also recorded a short-term decline along with Bitcoin (BTC) correction this week. The price of MicroStrategy dropped more than 7.5% in the 24 hours before 9:52 AM UTC on November 27 to trade at 354.1 USD, data from TradingView shows.
MicroStrategy: still a leveraged Bitcoin trade?
This price drop occurred simultaneously with Bitcoin's correction after reaching an all-time high of around 99,800 USD on November 22.
Since Bitcoin peaked on November 22, the value of this cryptocurrency has dropped by more than 7%, while the stock price of MicroStrategy has decreased by more than 14%.
MicroStrategy and Bitcoin, 1-week chart. Source: TinTucBitcoin/TradingView
However, both Bitcoin and MicroStrategy recorded strong gains over a broader timeframe. In the past month, Bitcoin increased by 44% while MicroStrategy rose by more than 32%. On the yearly chart, Bitcoin is up 146% while MicroStrategy has increased by over 599%.
Many investors are viewing MicroStrategy as a leveraged investment in Bitcoin's price, which is expected to outperform the returns of the world's first cryptocurrency.
MicroStrategy correction. Source: The Kobeissi Letter
However, MicroStrategy's recent 35% decline — more than four times the correction of Bitcoin — raises concerns about the volatility of this stock as a proxy for Bitcoin.
MicroStrategy's volatility caused by retail investors
This increased volatility is the result of more and more retail traders, according to a letter from Kobeissi:
"Just on Wednesday of last week, retail investors bought ~42 million USD worth of MicroStrategy shares, $MSTR. This was the largest retail buying day ever and 8 TIMES higher than the daily average in October."
Retail investors bought nearly 100 million USD worth of MicroStrategy shares in the past week, with growing interest partly due to the company's 2.6 billion USD debt proposal.
MicroStrategy Class A net purchases by retail. Source: The Kobeissi Letter
Some of the largest traditional institutions in the world are investing in Michael Saylor's company, including Allianz, the second-largest insurance provider in Europe, which purchased more than 24% of MicroStrategy's 600 million USD debt proposal in March.
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