MicroStrategy's (MSTR) 256% Premium to Bitcoin (BTC) NAV Is 'Insane,' Says BitMEX Research

The analysis highlights the extreme valuation disparity between MicroStrategy's current market capitalization, driven by its aggressive Bitcoin acquisition strategy, and the actual value of the Bitcoin it holds.

MicroStrategy MSTR stock price surged on Monday morning after rising sharply last week, fueled by its unique strategy of deploying excess cash into Bitcoin BTC/USD.

While the company's stock performance has grabbed headlines, a deeper analysis reveals a striking disparity between MicroStrategy's market valuation and the net asset value (NAV) of its Bitcoin holdings.

According to BitMEX Research, MSTR stock is currently trading at an astonishing 256% premium to the NAV of its Bitcoin holdings, highlighting the extreme optimism among investors.

A Closer Look at the Disparity

MicroStrategy's Bitcoin holdings, as of Monday, are valued at approximately $32.3 billion, assuming a Bitcoin price of $97,600 and the total bitcoin holdings are 331,200.

However, the company's fully diluted market capitalization stands at $115 billion, with a share price of $474, indicating a valuation that is significantly higher than its Bitcoin holdings.

This disparity is largely driven by investors betting on the company's ability to continue acquiring Bitcoin at a premium, which is then used to calculate the NAV.

Breaking Down the Numbers

To illustrate the scale of the premium, BitMEX Research explored scenarios where MicroStrategy could align its Bitcoin per share value with its current trading price of $474.

Assuming the Bitcoin price remains constant at $97,600 and the premium persists, the company would need to

This iterative calculation assumes the company continues issuing new equity at a premium to acquire more Bitcoin, a strategy that has been a key part of MicroStrategy's plan since 2020.

"If the premium persists, the company can keep issuing new shares until the value of the Bitcoin per share equals the current share price," BitMEX Research noted.

Premium: A Sign of Enthusiasm or Speculation?

The high premium on MSTR stock has sparked differing opinions, with some arguing that it is a consequence of investor enthusiasm for obtaining indirect exposure to Bitcoin, while others view it as a speculative bubble.

According to BitMEX Research, the premium is likely only sustainable if investors continue to be enticed by MicroStrategy's yield strategy.

"At that point, with a $1,685 share price, people may need to think the premium will still remain for another round of this," the analysis added.

MicroStrategy's Bitcoin Proxy Status

The company's holdings position it as a major Bitcoin proxy. However, the 256% premium suggests that investors are paying a substantial markup for exposure, which is far greater than the actual value of its Bitcoin holdings.

This disparity highlights the optimism and speculative nature of the market's enthusiasm for Bitcoin and the lengths to which some investors are going to gain exposure.