MicroStrategy shares soar 350% on 2023 Bitcoin ETF boost
MicroStrategy ( MSTR ) has seen its stock rise more than 350% in 2023, largely due to hopes surrounding the approval of a Bitcoin exchange-traded fund (ETF) in the United States. At the time of writing, MSTR is at $654, up 8.3% on the day.
The company's massive exposure to Bitcoin (BTC) is supporting the stock's performance. MicroStrategy and its partners hold 189,150 BTC, representing a total purchase price of approximately $5.9 billion and an average purchase price of $31,168 per BTC, according to a report by Cointelegraph.
MicroStrategy's exposure to cryptocurrency is leading some analysts to label the stock “essentially a leveraged Bitcoin ETF.” A combination of long-term, low-interest debt and equity issuance was used to finance the company's BTC purchase, according to an analysis from Seeking Alpha based on the company's quarterly earnings.
As of Sept. 30, MicroStrategy's total liabilities stood at $2.534 billion, a 7.7% year-over-year decrease, while long-term liabilities increased to $2.180 billion.
“The senior convertible notes will not mature until December 2025. From Saylor's perspective, it is unwise to invest the company's coffers in a liquid asset that is impervious to dramatic supply inflation,” the analysis says. Senior convertible notes are a type of debt instrument used by companies to raise capital.
MicroStrategy provides business intelligence, mobile software and cloud-based services. Its main product is a data analysis platform, used by businesses for data visualization. The company's growing exposure to Bitcoin keeps its balance sheet closely tied to the volatility and risks of crypto markets.
The prospect of trading BTC ETFs on Wall Street is fueling the cryptocurrency's price. Despite tight macroeconomic conditions and headwinds in the crypto industry, Bitcoin's value has gained more than 160% in 2023, outperforming major traditional assets. Spot trading means buying or selling bitcoins at the current market price.
The US Securities and Exchange Commission is expected to rule on allowing Bitcoin to be traded through ETFs in early January, with major firms such as Fidelity and BlackRock in the running. The approval could boost bitcoin prices and market liquidity by opening up the cryptocurrency to a wider audience of investors.
Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in.
