Microstrategy Decouples from Bitcoin, but for How Long?

by JDH on October 12, 2024

Here’s the chart of MSTR—Microstrategy Inc. As you can see, for the first part of the chart Bitcoin (the red line) and MSTR are highly correlated.

But at the end of February, 2024 Bitcoin began trading in a range of around $58,000 USD, and it’s stayed there ever since, while Microstrategy has been much more volatile.  Let’s zoom in:

Since mid-October Bitcoin has remained flat, but Microstragey is up, big time.  Since October 1, MSTR is up 35%.  Bitcoin is up less than 5%.

What’s going on?

I assume that speculators believe that Bitcoin is heading higher, and they want the leverage provided by MSTR.

If you want to own Bitcoin, but you want to own it through your stock broker, perhaps in a retirement account, MSTR is an easy alternative.  You own it, and you get leverage.

Of course, leverage works both ways.  When Bitcoin corrects, as it does often, MSTR will crash by a lot more than Bitcoin.

So, if you want a strategy, buy Microstrategy when it’s near the bottom of it’s trading range, and sell when it’s near the top.

Or avoid it entirely and sleep well at night.  Take your pick.

Happy Canadian Thanksgiving.  No report next week.  See you in two weeks.