MicroStrategy shares fell 11%, strengthening the view of investors pessimistic about the company, while those optimistic about Bitcoin saw an opportunity. Kerrisdale Capital Management highlighted the disproportionate rise in MicroStrategy shares compared to Bitcoin and adopted a strategy of buying Bitcoin and selling shares of the company.
Over the past month, while MicroStrategy has risen nearly 58%, Bitcoin has only advanced about 13%, leading to a perception that the company's stock premium is inflated.
Kerrisdale noted that MicroStrategy's current stock premium cannot be justified, especially with investors' increasing accessibility to Bitcoin through other investment platforms.
While MicroStrategy has been praised for its strategy of keeping Bitcoin in its portfolio, Kerrisdale argues that the company's high stock premium is unsustainable given the availability of other Bitcoin investment options.
The company issued debt to buy more Bitcoin, boosting its stock premium, but Kerrisdale believes that strategy is losing steam. MicroStrategy's stock appreciation, along with Bitcoin's rally, raises concerns about the company's high leverage, which could result in a significant downturn.
While some investors have seen gains from Bitcoin's rise, others have faced substantial losses when betting against MicroStrategy, with estimates of more than $4 billion in losses accumulated to date.
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