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Date: 2025-02-25 12:47:58
The stock of Strategy, previously known as MicroStrategy, experienced a drop of over 5%. Additionally, the ratio of the company's market capitalization to its Bitcoin holdings has decreased to 1.6 following Bitcoin's fall below $90,000.
Data from Yahoo Finance indicates that Strategy's stock has dropped by 5.65% during pre-market trading. The company's stock closed at $282.76 on today's trading day, which ended at 16:00 PM EST. This decline in Strategy's stock is believed to be due to the drop in Bitcoin's price, which went as low as $87,630 on Feb. 25.
The decline in Bitcoin's price not only affected Strategy's stock price but also its premium ratio. Michael Saylor's company has had a strong connection with Bitcoin, as it is well-known for being the largest corporate holder of BTC. Since late 2024, the software development firm has owned more than 2% of Bitcoin's total supply. Recently, it purchased 20,356 Bitcoin, worth nearly $2 billion at the time of purchase.
Unfortunately, crypto analyst Miles Deutscher stated that Strategy may have to pause its Bitcoin buying spree following the recent price drop.
The premium of $MSTR's market cap to its underlying $BTC holdings has plummeted from a high of 3.4 in November to only 1.6 at present.
As this number decreases, it will become increasingly difficult for Saylor to raise additional capital for $BTC purchases.
It appears that he will have to reduce his pace. pic.twitter.com/yljEAgHyot
According to Deutscher's analysis, the premium market cap to Bitcoin holdings ratio for MSTR has significantly decreased from its peak of 3.4 in November to only 1.6 on Feb. 25. This indicates that the stock's market value is now closer to the actual value of its Bitcoin holdings, rather than being inflated by high prices.
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"The lower this number goes, the harder it will be for Saylor to raise more capital for BTC purchases," Deutscher stated in a recent post.
As a result of the Bitcoin price drop, the company will face difficulties issuing shares or using its stock to generate the funds needed to buy more Bitcoin if BTC does not recover in the near future. Moreover, investors will be unwilling to pay more than the current intrinsic value of Bitcoin, thus limiting Saylor's ability to raise capital.
Earlier, crypto.news reported that Bitcoin fell by 6.78% on Feb. 25. Matrixport analysts warned that BTC could see a deeper decline, especially with low trading activity hindering demand for dip-buying.
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