Steno Research notes that MicroStrategy’s 300% premium over Bitcoin is unsustainable, as investors may shift to options trading on spot Bitcoin ETFs.
Over the past many many years, investors have been betting on MicroStrategy Inc (NASDAQ: MSTR) as a proxy bet in Bitcoin. As a result, the MSTR share has continued to enjoy a massive premium over the Bitcoin BTC $109 260 24h volatility: 0.8% Market cap: $2.17 T Vol. 24h: $36.82 B price gains.
However, in its latest report, Steno Research stated that the massive 300% premium that MSTR enjoys over BTC is unsustainable. Last week, the MicroStrategy stock rallied to its all-time high levels extending its year-to-date gains to more than 242%. On the other hand, Bitcoin is trading at more than 50% gains.
While Microstrategy investors and shareholders have enjoyed a massive premium, they shall be cautious henceforth from here. Steno Research analyst Mads Eberhardt noted that confidence is bolstered by the waning impact of MicroStrategy’s recent stock split.
Additionally, the introduction of options on spot Bitcoin exchange-traded funds (ETFs) in the US is expected to reduce investors’ incentives to hold MicroStrategy stock over these ETFs.
The reports also noted that as regulators become more favorable to having Bitcoin investment products, investors would prefer holding BTC directly rather than MicroStrategy stock. This regulatory trend is likely to persist if Donald Trump is re-elected, noted Steno.
The report further added that it shows MicroStrategy’s valuation is “diverging significantly from a straightforward calculation of its asset and business fundamentals”.
Bitcoin is projected to perform well this quarter and into 2025, indicating that “even greater buying demand would be needed to maintain MicroStrategy’s current premium,” the note stated. The report further highlighted that MicroStrategy’s current premium is unsustainable, as it remained below 200% for most of the 2021 crypto bull market.
MicroStrategy Overtakes Amazon in This Metric
In his recent post on the X platform, MicroStrategy executive Chairman Michael Saylor shared the impressive performance of his company’s stock outperforming two tech giants Amazon Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) in terms of trading volumes last Friday. “Bitcoin makes the Magnificent 8,” said Saylor.
#Bitcoin makes the Magnificent 8 pic.twitter.com/05qyTqzX2D
— Michael Saylor⚡️ (@saylor) October 27, 2024
In the final trading session of the week, MicroStrategy posted an impressive $5.8 billion in trading volume, surpassing major players like Amazon and Alphabet, which saw volumes of $5.5 billion and $2.4 billion, respectively.
Known primarily as the largest corporate holder of Bitcoin, MicroStrategy’s ability to outpace some of the “Magnificent 7” in daily trading volume is notable, especially considering its market cap is just $47.48 billion.
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