The stock price of MicroStrategy (MSTR) experienced a significant increase of more than 20% during the early trading hours in the United States on March 4. By midday, it maintained a gain of over 15%. MicroStrategy is an active investor in Bitcoin (BTC).
After closing at $1,079 on the previous trading day, MicroStrategy opened at $1,200 on March 4 and reached a peak of $1,339 during the day.
According to Andrew Kang, co-founder of Mechanism Capital, approximately 20% of the publicly available shares in MicroStrategy, amounting to around $3 billion, were locked into short positions. Kang explained on X that investors aimed to take advantage of the stock’s increasing value compared to its net assets, assuming that the share price would eventually decline.
Kang cautioned that miscalculations could lead to a situation where “that spread blows out in a mega squeeze,” similar to the short squeeze experienced by GameStop (GME) in January 2021. GME’s share price rose by 1,500% over two weeks on January 29, 2021, only to fall to $13 within a month after reaching a high of over $81.
MicroStrategy announced that it had added 3,000 BTC to its holdings between February 15 and 25, with an average purchase price of $51,813, totaling $155 million. Founder and chairman Michael Saylor revealed this information on X on February 26. With this addition, the company’s BTC holdings now amount to 193,000 BTC, acquired at an average price of $31,554, with a total value of $6.1 billion.
Considering the BTC price of $66,332 recorded on March 4, MicroStrategy’s BTC holdings are currently valued at $12.8 billion.
Market observers were already bullish on MicroStrategy. In a market report published on February 27, investment banker Benchmark labeled MicroStrategy as a “buy” with a target price of $990. Benchmark also predicted that the upcoming BTC halving would further boost MicroStrategy’s share price.
On February 20, Saylor expressed his intention to continue buying Bitcoin indefinitely, stating that it is technically superior to gold, real estate, and the S&P 500.
At the time of writing, MicroStrategy’s stock was trading at $1,251, marking an increase of nearly 16% for the day.
Magazine: Michael Saylor is a fan, but Frisby suggests that the bull run needs a new guru: X Hall of Flame.