Michael Saylor’s MicroStrategy Bitcoin gamble has once again ignited debate after MSTR experienced the largest four-day market cap decline, shedding 35% of its value, equivalent to over $30 billion. Questions now linger about the role of leveraged Bitcoin as an investment tool.
Records of the unprecedented drop are highlighted in the Kobeissi letter posted last Tuesday, November 26, on an X post marking a sharp drop. The decline marked the steepest four-day drop, which represents a “whole new level of volatility for the Bitcoin proxy.” The Kobeissi letter wondered whether Saylor would continue to raise debt via the MicroStrategy Bitcoin gamble, stating that “Bulls will argue that Saylor has transformed the business world and the stock is cheap. Bears will argue that this is a textbook Ponzi scheme and capital is beginning to dry up.”
Companies Adopting the MicroStrategy Bitcoin Gamble
While the price of Bitcoin and the MSTR stock were both up during trading on Wednesday, the 30% decline below last week’s level on Michael Saylor’s company was the lowest ever recorded. In looking for an explanation, investors and analysts would need to look beyond the obvious metrics like the size of the company’s Bitcoin holdings and check on the fund’s management and options pricing.
The decline happens at a time when other NYSE-listed companies are taking up the MicroStrategy Bitcoin gamble and adding BTC to their portfolios. One such company announced splashing over $50 million towards buying BTC to join the likes of Semler Scientific and MetaPlanet. While MicroStrategy remains in terms of its liquidity, its use of Bitcoin as leverage seems to be gaining popularity. It is so far the largest publicly traded asset manager whose stocks are linked to the price of the flagship cryptocurrency.
Michael Saylor Bets Big On Bitcoin
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Michael Saylor is a big believer in Bitcoin and has placed a huge bet on the digital asset. He has led the asset management firm into buying BTC since 2020 and hasn’t stopped since. Saylor further heightened the stakes of his MicroStrategy Bitcoin gamble on November 21 when the company announced a $3 billion convertible notes token offering due in 2029 to raise capital to buy even more Bitcoin.
As per records in the firm’s November 25 8-K filing made at the US Securities and Exchange Commission (SEC), the firm bought at least 55,000 more Bitcoins at an estimated $%.4 billion. Speaking during a recent CNBC media interview, Saylor remained optimistic that the MicroStrategy Bitcoin gamble would progress successfully, adding that the firm was “making $500 million a day […] I’m staring at my screen, and we’re selling dollar bills for $3, sometimes a million times a minute.”
MSTR and BTC Have Recorded Relatively Strong Gains over the Larger Time frame
Despite the recent price correction that has seen some people question the integrity of the MicroStrategy Bitcoin gamble, both MSTR and BTC have recorded relatively strong gains over the larger timeframe. For example, during the last month, available data shows that Bitcoin’s value surged 44% while MSTR itself rallied at least 32%. When it comes to the wider yearly scale, the price of Bitcoin has gained over 146%, with the MicroStrategy Stock skyrocketing 599%. The results seem to underline MSTR’s leveraged exposure to Bitcoin’s overall performance. There are also high chances that the firm’s $2.6 billion note offering may have also contributed immensely by fueling investor interest thus cementing commitment to the MicroStrategy Bitcoin gamble.
Conclusion
Sentiments associated with the Kobeissi letter on the veracity or otherwise of the MicroStrategy Bitcoin gamble come at a time when BTC seems to have retreated following the post-election surge that saw it tease the $100,000 price threshold. The flagship cryptocurrency has had its value gain tremendously following the election of a pro-crypto President during the last US general election, which has carried the entire crypto space along. The possibility of Trump enacting crypto-friendly regulations once he assumes office could further bolster the price of Bitcoin and possibly eliminate the negative sentiment that has clouded the MicroStrategy Bitcoin gamble.
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