The premium on shares of MicroStrategy, a U.S. software company known for its substantial Bitcoin (BTC) investments, has reached close to 300% above the value of its BTC holdings, raising concerns about its sustainability. According to Steno Research, this premium level may not be maintainable in the long run. MicroStrategy’s recent 10-for-1 stock split and potential alternatives like spot Bitcoin ETFs in the U.S. could reduce demand for MicroStrategy shares.
Stock Split Impact Fades, Demand May Decline
Steno Research analyst Mads Eberhardt notes that the effects of MicroStrategy’s recent stock split are waning. During the bull market of 2021, the stock’s premium never exceeded 200%, highlighting that today’s 300% premium has veered significantly from the company’s asset and fundamental metrics. Despite the initial post-split rise, analysts question the premium’s sustainability.
ETFs Could Draw Investors Away from MicroStrategy
The introduction of spot Bitcoin ETF options in the U.S. could lead investors to consider direct exposure to BTC or these ETFs instead of MicroStrategy shares. Steno Research’s report suggests that as institutional interest in Bitcoin grows, investors may increasingly prefer direct investment in crypto assets. Additionally, a more favorable regulatory stance toward Bitcoin ETFs in the U.S. could attract investors to choose these products over MicroStrategy.
Although MicroStrategy shares have maintained a high premium since 2021, analysts express doubts about its durability amid Bitcoin’s projected strong performance in the coming year. Bitcoin, currently trading at $68,714 after a 2.37% rise in the past 24 hours, has positioned MicroStrategy stock at $234.34 at the start of the trading week.
MicroStrategy, Bitcoin, premium rate, stock split, Bitcoin ETFs
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