u.today
MicroStrategy (MSTR), the business intelligence firm, is in the news again. This time, there are speculations that the Michael Saylor-led firm plans to issue 10 billion MSTR shares to purchase an additional $3 trillion worth of Bitcoin (BTC).
Analyst dispels MicroStrategy rumors
Jeff Park, Head of Alpha Strategies at Bitwise Asset Management, proffered reasons not to believe the speculation in a post on X. Park’s tone suggests disbelief, given the unrealistic nature of such a move, and dismisses it outright.
Primarily, the figure is staggeringly huge. To Park, it sounds absurd for a company to invest $3 trillion into an asset. Interestingly, the total market capitalization of Bitcoin currently at the market price is less than $2 trillion. Hence, pulling such a move would be almost impossible, as MicroStrategy is worth about $85 billion.
$MSTR is not issuing 10 billion shares to buy $3 trillion worth of Bitcoin.
— Jeff Park (@dgt10011) December 24, 2024
I can’t believe I’m tweeting this on Christmas Eve.
Beyond the surface, Park also addressed critical issues among some potential investors holding back from MSTR due to the price fluctuations of BTC. He referenced a previous post explaining the fears around MSTR and its price performance relative to the crypto market.
Bitcoin and MSTR’s valuation
Notably, Park clarified that MicroStrategy’s heavy investment in Bitcoin makes the value of the company’s shares intrinsically tied to BTC. He noted that if MSTR should dip to zero, Bitcoin’s value will be negatively affected.
However, he assured readers that even if Bitcoin plummets to a record low of $30,000, MSTR will still not crash to zero.
Park highlighted that MicroStrategy has multiple capital extension strategies and additional levers to win in the broader market. This aligns with a U.Today report, where Adam Back, Blockstream CEO, maintains that MicroStrategy’s shares are cheap, believing they are undervalued.
Furthermore, Park maintains that investors need to avoid being bearish with MSTR every time the price of Bitcoin drops. As of this writing, the BTC price was trading up by 3.95% at $97,548 in a surprising market rebound.