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Shares of MicroStrategy Inc. (NASDAQ:MSTR) fell more than 8.5% on Monday, marking a rough debut for its nascent tenure among the Nasdaq 100.
The software company and top company Bitcoin (CRYPTO:BTC) holder has been having a tough time lately. It posted its fifth losing session in the past six sessions, falling more than 37% since its all-time high last month.
Why is MicroStrategy declining?
On Monday, MicroStrategy announced that it had sold $561 million worth of common stock to buy an additional 5,262 Bitcoins at an average price of $106,662 per coin. This brings the company’s total Bitcoin holdings to a staggering 444,262 BTC.
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Still, both the size and timing of this purchase raised eyebrows among traders and analysts.
The last Bitcoin purchase was Michael Saylor‘s smallest yet. It’s in stark contrast to the bold, major acquisitions that have defined its crypto strategy to date.
The average price paid for the new Bitcoin supply is about 12% above current levels. Even more telling, the price surpasses the Dec. 17 record high of $106,151 per Bitcoin — an unusual move for a company known for strategically buying dips.
Critics did not hold back. Peter Schiffa known Bitcoin skeptic, made a joke to Saylor on X saying:
“It seems like you are running out of firepower to continue supporting Bitcoin. Moreover, this is not only your smallest purchase, but the first time your average purchase price was above the market price on the Monday you announced the purchase.”
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Meanwhile, the market’s reaction reflected growing unease.
“$MSTR still looks pretty tough,” wrote the Markets & Mayhem account on high beta love.”
A risky game of leverage
MicroStrategy’s deep ties to Bitcoin have been both the company’s crown jewel and Achilles heel. With over $41 billion worth of Bitcoin on its balance sheet as of December 2024, the company is inextricably linked to the volatile movements of the cryptocurrency market.
Still, the latest purchase signals cracks in the strategy. Not only was this one of the smallest Bitcoin purchases in recent years, but it also indicates that MicroStrategy may be overextending itself as Bitcoin prices falter.
Adding to investor concerns, MicroStrategy is pivoting away from its original software business. The company has focused heavily on Bitcoin speculation, raising questions about its ability to generate sustainable cash flow from its core businesses.
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What’s next for MSTR?
While MicroStrategy remains a favorite among Bitcoin bulls, the stock’s recent performance suggests caution. The company has lost almost 40% of its value in just over a month, despite Bitcoin being worth almost $100,000.
The broader Nasdaq 100 debut was supposed to be a moment of validation for MicroStrategy, but instead it highlighted the risks of its hyper-concentrated bet on cryptocurrency.
As 2024 nears its end, all eyes will be on Bitcoin’s price trajectory. If the cryptocurrency cannot regain upward momentum, MicroStrategy’s high-stakes play could come under increasing pressure.
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This article MicroStrategy sinks after Nasdaq 100 inclusion: Bitcoin bet under fire? originally appeared on Benzinga.com
