MicroStrategy, the largest corporate holder of bitcoin, currently holds almost 2.5% of the overall bitcoin supply. However, despite its significant bitcoin holdings, the company’s stock price has plummeted by 40% from its peak, raising concerns as Bitcoin struggles to maintain a price above $90,000. At present, MicroStrategy’s stock is trading at a 60% premium above its fair value, indicating that investors may be overpaying for the stock.
One possible explanation for MicroStrategy’s stock decline could be institutional investors cashing out during November 2024 when Bitcoin surged past $95,000. According to 10x Research, the firm traded $40 billion in volume during that period, with institutional investors likely offloading their positions to retail traders at inflated prices. As a result, retail buyers now face heavy losses despite Bitcoin’s price remaining stable.
Moreover, Bitcoin’s recent price movements suggest that the market is entering a consolidation phase. The cryptocurrency experienced an 89% surge between September and December 2024, driven by expectations of Federal Reserve rate cuts. However, the December rate cut was perceived as hawkish, indicating that the Fed may not cut rates further in the near future. This cautious stance has kept Bitcoin in a consolidation phase, increasing the risk of a further correction.
Additionally, Bitcoin ETF outflows have added more pressure to the cryptocurrency market. In February 2025, Bitcoin ETFs experienced significant outflows, with $1.3 billion exiting the market. Hedge funds engaging in arbitrage strategies contributed to a large portion of these outflows, further intensifying selling pressure on Bitcoin and the broader market.
Despite the challenges faced by Bitcoin and MicroStrategy, the company has continued to accumulate Bitcoin, adding $6 billion worth since December. However, 10x Research notes that MicroStrategy’s stock is losing its premium over its net asset value (NAV). The stock’s NAV premium, which peaked at 3.4x, has since dropped to 1.6x, suggesting a fair value of $156 per share.
In conclusion, with Bitcoin struggling to hold above $90,000 and facing selling pressure from ETF holders and hedge funds, there is a possibility of further declines in both Bitcoin’s price and MicroStrategy’s stock. Technical analysis indicates that Bitcoin must hold certain support levels to avoid a further decline, which could potentially impact MicroStrategy’s stock price as well.