MicroStrategy Shares Slip Amid Wider Crypto Sell-Off After Bitcoin Rally

NASHVILLE, Tennessee — MicroStrategy‘s shares failed to maintain early gains on Monday, closing down 1.8% after initially rising more than 14%. This fluctuation came amid a broader sell-off in the cryptocurrency market, which saw Bitcoin‘s price drop over 8% on the same day, according to Coin Metrics.

The plunge occurred despite a weekend rally that brought Bitcoin’s price back above $90,000. The uptick in value was linked to President Biden‘s announcement that the U.S. would establish a cryptocurrency reserve, which would include Bitcoin along with four other cryptocurrencies.

Michael Saylor, executive chairman of MicroStrategy, spoke on CNBC’s “Squawk Box,” stating, “There’s no way to interpret this other than this is bullish for Bitcoin and is bullish for the entire U.S. crypto industry.” He emphasized that the establishment of such a reserve could potentially drive Bitcoin prices higher, thereby increasing the overall value of MicroStrategy’s Bitcoin holdings.

MicroStrategy has invested significantly in Bitcoin over the past few years, currently holding around 499,096 BTC, valued at approximately $47 billion. This amount constitutes about 2.5% of the total Bitcoin supply. Analyst Gautam Chhugani from Bernstein pointed out that the anticipated Bitcoin reserve would benefit MicroStrategy, especially in terms of access to capital markets and enhancing its Bitcoin strategy.

“In our view, a big beneficiary of the Bitcoin reserve is MSTR. This could open up significant opportunities for capital access and further scale their Bitcoin strategy,” Chhugani noted in a client report. However, on Monday morning, MicroStrategy disclosed that it did not sell any common stock or purchase Bitcoin between February 24 and March 2, under its at-the-market offering plan.

As the volatility in the market continues, investors are keen to see how the potential establishment of the crypto reserve may influence both Bitcoin valuations and MicroStrategy’s investment strategy in the months ahead.