Is Bitcoin Responsible for the Overvaluation of MicroStrategy?

MicroStrategy, under the leadership of CEO Michael Saylor, has been causing a stir in the investment world with its significant Bitcoin acquisitions. The company’s recent purchase of a large amount of Bitcoins has sparked speculation about the connection between its Bitcoin holdings and the rising MSTR stock price.

As Bitcoin gains more attention from institutions, questions arise about whether MicroStrategy’s optimistic stance on the cryptocurrency is driving its stock valuation or leading to an overvaluation.

Bitcoin Acquisition Boosts Stock Price

MicroStrategy, led by CEO Michael Saylor, has become known for its Bitcoin investments, accumulating a substantial amount of the cryptocurrency. The recent acquisition of an additional 9,245 BTC solidifies the company’s position as a major Bitcoin holder in the corporate world.

With MicroStrategy now holding over 214,000 BTC, equivalent to 1% of the total Bitcoin supply, the focus is on how this accumulation is influencing the company’s stock and MSTR performance.

Meanwhile, as Bitcoin gains more acceptance, MicroStrategy’s commitment to the digital asset has driven its stock price to new highs. In 2024, the MSTR stock rose by around 170%, fueled by growing optimism surrounding Bitcoin and MicroStrategy’s strategic Bitcoin purchases. In the past month alone, the stock saw a significant increase of over 65%, reflecting the excitement around the cryptocurrency market.

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Is MicroStrategy Overvalued Due to Bitcoin Hype?

Despite MicroStrategy’s positive outlook and its impressive Bitcoin holdings, concerns about the stock’s valuation have surfaced. According to Markus Thielen’s 10X Research, a leading crypto research firm, MicroStrategy shares are considered overvalued by up to 60% based on regression with Bitcoin. When compared to the company’s actual Bitcoin holdings, the overvaluation increases to nearly 100%.

Source: 10X Research, X

Thielen’s analysis suggests that the stock price of MicroStrategy may not accurately reflect its true value, considering its heavy dependence on Bitcoin performance. While MicroStrategy has become a symbol for Bitcoin enthusiasts in the corporate world, there are doubts about whether the stock’s rapid rise aligns with fundamental market principles.

With Thielen’s research indicating a more conservative valuation range for MicroStrategy, investors are advised to be cautious amid the excitement surrounding Bitcoin. The MSTR stock closed at $1,704.56 on March 28, down 11.18% from its previous session.

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