- MicroStrategy faced a record 35% drop in market cap during Bitcoin’s correction.
- Retail investors poured $100 million into MicroStrategy stock despite continued market volatility.
Once celebrated for rising stock prices and daring Bitcoin [BTC] investment strategy, MicroStrategy is now facing the sharpest drop in market capitalization in four days ever.
The company’s valuation fell more than 35% from its November 21 peak, losing more than $30 billion.
On November 26, MicroStrategy shares [MSTR] saw another decline of 12% to close at $353 as selling pressure increased.
This dramatic downturn has reignited the debate over the risks of the heavily Bitcoin-focused approach.
MicroStrategy shares are plummeting
Making the same comment on this, Kobeissi lettertook to X (formerly Twitter) and highlighted:
“MicroStrategy stock, MSTR, just fell 35% from its peak on November 21st. That’s ~$30 BILLION in market cap wiped out in four trading days.”
This coincided with BTC once approaching the $100,000 mark and now trading at $93,418.96. CoinMarketCap.
Kobeissi Letter added:
Source: The Kobeissi letter/X
Despite a brief recovery, MSTR shares continue to feel the impact of Bitcoin’s ongoing correction.
As of November 27, the stock price fell 7.5% in 24 hours and was trading at $354.10 per month. TradingView data.
Interestingly, retail investors have shown unprecedented interest in MSTR stock.
MSTR stock after Trump’s victory
According to The Kobeissi Letter, retail investors bought $42 million worth of shares in one day last week – a record amount that is eight times higher than October’s daily average.
For those who don’t know, private investors have done just that collectively over the past week funneled $100 million in MicroStrategy, underscoring growing confidence amid market volatility.
Furthermore, November witnessed a notable strengthening of the correlation between MSTR and Bitcoin, especially after Donald Trump’s election victory.
However, despite a sharp 35% correction in MicroStrategy shares, both assets maintained impressive monthly gains, each up 37%.
Therefore, their performance remains robust over a broader time frame.
How are Bitcoin and MicroStrategy related?
In the past month, Bitcoin rose 44%, while MicroStrategy rallied 32%.
On a year-over-year basis, BTC’s growth reached 146%, while MSTR surpassed it with a staggering 599% increase, highlighting its exposure to the cryptocurrency’s bullish trajectory.
The price movements of MicroStrategy and other crypto-related stocks remain highly dependent on the performance of Bitcoin, as these entities either own the assets or generate income through trading activities.
Following Trump’s US election victory, BTC’s rally gained momentum, although it hovered just below the $100,000 mark, which was attributed to a large number of put options below this level.
As expected, the recent price drop has once again sparked criticism from skeptics, including Peter Schiff, who took the opportunity to highlight perceived vulnerabilities in Bitcoin and MicroStrategy’s dependence on it.
Schiff wrote,
“It has now been four weeks since the company announced its three-year plan to spend $42 billion buying Bitcoin. MSTR has already spent $10 billion. At this rate, the three-year plan will be completed in about sixteen weeks. Once the purchase is made, expect both Bitcoin and MSTR to crash.”