MicroStrategy, under the leadership of CEO Michael Saylor, is making waves in the investment world with its major Bitcoin acquisition. The company's recent purchase of large amounts of Bitcoin has further fueled speculation about the correlation between the company's Bitcoin holdings and the soaring MSTR stock price.
Meanwhile, as Bitcoin continues to garner interest from institutional investors, the question is whether MicroStrategy's bullish stance on the cryptocurrency is driving up the company's stock valuation or leading to overvaluation.
Bitcoin boom helps stock prices rise
MicroStrategy, led by CEO Michael Saylor, has become synonymous with Bitcoin investing and has amassed significant assets in the cryptocurrency. Notably, the company's recent acquisition of an additional 9,245 BTC further solidifies its position as a major Bitcoin holder in the corporate world.
Additionally, MicroStrategy's total Bitcoin holdings currently exceed 214,000 BTC, which is equivalent to 1% of the maximum Bitcoin supply, and attention is focused on the impact this accumulation will have on the company's stock price and MSTR's performance.
Meanwhile, MicroStrategy's unwavering commitment to digital assets has propelled the stock to new heights as Bitcoin gains mainstream acceptance. MSTR stock has soared nearly 170% in 2024 alone on growing optimism surrounding Bitcoin and MicroStrategy's strategic Bitcoin acquisition. Additionally, the stock has seen an impressive increase of over 65% over the past month, reflecting the excitement surrounding the crypto market.
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Is MicroStrategy overvalued amidst the Bitcoin hype?
Despite MicroStrategy's bullish outlook and impressive Bitcoin holdings, concerns about the stock's valuation have emerged. According to 10X Research by Markus Thielen, a leading crypto research firm, MicroStrategy stock is believed to be overvalued by up to 60% based on its regression with Bitcoin. On the other hand, when evaluated against the company's actual Bitcoin holdings, the overvaluation jumps to nearly 100%.
Meanwhile, Thielen's analysis suggests that MicroStrategy's stock price may not accurately reflect its intrinsic value, given its heavy dependence on Bitcoin's performance. MicroStrategy has emerged as a standard-bearer for Bitcoin enthusiasts in the corporate sector, but questions remain as to whether the meteoric rise in its stock price is consistent with fundamental market principles.
Thielen's research shows MicroStrategy's valuation range is more modest, and investors are urged to exercise caution amidst the Bitcoin euphoria. Meanwhile, MSTR's stock price closed at $1,704.56 on March 28, down 11.18% from the previous market.
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