2024-06-18 00:05:15 ET
Summary
- MicroStrategy has leveraged its stake in Bitcoin with borrowed money to produce lucrative investment gains during 2023-24.
- The flip side is, downside risks will be exaggerated if and when Bitcoin falls hard again.
- The Company's operating business fails to produce income, while investors paying 2x the market value of its Bitcoin holdings are other bearish issues to consider.
- A share price drop to zero, or close to it, for MSTR is a real possibility, given Bitcoin crashes later this year and/or 2025.
MicroStrategy Incorporated ( MSTR ) has ridden the Bitcoin ( BTC-USD ) craze amazingly well, leveraging with borrowed money its current 214,400 stake in the world's leading cryptocurrency. It's a brilliant investment strategy to employ when you are speculating on an asset going straight up in price, especially with the pyramiding plan of buying high and higher prices executed by management. Share ownership is basically a margined position in Bitcoin. The problem arises when the world's main cryptocurrency slides hard in price, which it has done numerous times since invention during 2009. You can review below the high correlation in price swings between the two assets over the past five years....
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MicroStrategy: Overleveraged Gamble On Cryptocurrency That May Become Worthless In Bitcoin Crash