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Cryptocurrency News Articles
Bitcoin (BTC) Price Today Up 4.5% as Microstrategy (MSTR) Stock Market Cap Hits All-Time High
Oct 12, 2024 at 02:05 am
Bitcoin is up 4.5% today as it erases the past two days of selling. It's a nice move but leaves it right back to where it's been for the past eight
Bitcoin rose sharply on Monday, erasing losses from the previous two sessions, but the gains were limited as the world's largest cryptocurrency remained within a tight trading range.
Bitcoin was up 4.5% at $47,233.4 by 21:14 ET (0114 GMT). It fell as low as $44,000 on Friday.
The gains came despite bitcoin derivatives markets showing a rise in bearish bets. The ratio of puts, or bearish bets, to calls, or bullish bets, rose to 0.86 on Monday, from 0.7 at the end of last week.
Bitcoin has traded within a range of $44,000 to $50,000 for the past eight months. It hit a record high of $69,000 in November last year.
Among other digital assets, ether rose 3.5% to $3,438.6 and dogecoin gained 1.2% to $0.15.
Coming up: Keep an eye on Microstrategy
One stock that's getting a lot of attention today is Microstrategy (NASDAQ:MSTR). It's one of the easiest companies in the world to value. The reason? A whopping 97% of its assets are bitcoin.
And yet, shares of MSTR are hitting all-time highs today, up more than 12%.
That's a big disconnect between the value of the company's bitcoin holdings and the company itself. Shares are now trading at 2.5 times the value of its bitcoin holdings, which is non-sensical and matches the highs from Feb 2021 -- a time when markets were euphoric.
According to CoinDesk, MSTR's bitcoin holdings were valued at $15.1 billion and its market cap was $37.14 billion yesterday before including today's massive rally.
Something is amiss here. I suspect a fund that could be long bitcoin and short MSTR is puking out the position. One firm, Kerrisdale Capital, has publicized that strategy in the past:
Now I doubt that firm is big enough to move the market so much but the strategy looks like such low-hanging fruit that others were surely drawn in as well.
If bitcoin was breaking out, I would expect that premium to expand, but it's only up 4.5% today and still a ways from $70K. Maybe the MSTR market is front-running a breakout? It's possible, but something is off here and it has my attention.
I don't think it's the time to short MSTR right now because that chart is really breaking out, but at some point that premium to NAV needs to narrow and I don't think that's far off. In the meantime, watch how far this squeeze runs and it potentially becomes a meme.
Disclaimer:info@kdj.com
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