In the short term, the approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) created a massive downturn for the world’s foremost cryptocurrency and for the crypto market as a whole, as it wiped $100 billion in less than a week.
In addition to this, the shares of MicroStrategy (NASDAQ: MSTR), a company that tied its fate to that of BTC four years ago, also saw their price gutted as they fell 20% in the first 48 hours after the SEC officially unveiled its decision.
However, early February brought about a major change in trend. After approximately a month of indecision, Bitcoin broke out on Wednesday, February 7, and rapidly rose from almost exactly $43,000 to $46,629 by press time on February 9.
Indeed, the surge was significant enough that BTC’s year-to-date (YTD) chart turned positive, and the cryptocurrency is up 5.41% since January 1, 9.38% in the last week of trading, and 4.33% in the last 24 hours.
MicroStrategy rides the Bitcoin wave
As has commonly been the case since the company started buying Bitcoin, MSTR stock shot up during the current rally. In fact, after seeing a massive decline since January 1, the company rose as much as 18.21% in the last week.
The vast majority of this rally took place during the last full trading day – February 8 – as the company’s shares closed 15.71% in the green. Finally, Friday, February 9, is shaping up to be another exceptionally strong session as Microstrategy is up another 4.63% in premarket.
Can MSTR surge to $700
Having reached the average analyst price target of $615 retrieved from TipRanks on February 9 already in Friday’s pre-market and being very close to the current high estimate of $650, the question of whether MSTR stock can shoot even higher – to $700 and beyond – arises.
While such a target is high, especially given the company’s longer-term performance in the stock market, the fact that the firm’s share price rose $79.80 in the last 24 hours alone – $106.99 if the extended session is taken into account – lends it significant credibility.
Still, such a stellar surge remains uncertain and optimistic. For starters, such a significant surge tends to quickly lead to a correction as investors start taking profits quickly.
Additionally, MicroStrategy’s performance is deeply tied to Bitcoin’s price movements, and should its own rally peter out, it is unlikely that Michael Saylor’s firm could sustain its own.
Finally, the approval of spot BTC ETFs weakened MicroStrategy’s position as the main way for investors to get exposure to the cryptocurrency without directly owning it meaning that its already-imperfect correlation is likely to only become looser. In turn, this means that even a sustained Bitcoin surge needn’t necessarily lead to one for the firm.
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Hot Take: MicroStrategy’s Future Amidst Bitcoin Surge
The recent surge in Bitcoin’s price has brought about positive changes for MicroStrategy. The company’s stock has experienced a significant rally during this period, with an 18.21% increase in the past week alone. There are speculations about whether MicroStrategy’s stock can continue to rise and reach $700 and beyond.
While such a target seems ambitious, considering the company’s historical performance in the stock market, the recent surge in its share price lends it credibility. However, there are factors that may hinder its sustained growth, such as the possibility of a correction after a significant surge and MicroStrategy’s dependency on Bitcoin’s price movements.
Furthermore, the approval of spot BTC ETFs has weakened MicroStrategy’s position as the main avenue for investors to gain exposure to Bitcoin without owning it directly. This could impact the correlation between Bitcoin’s surge and MicroStrategy’s performance.
In conclusion, while MicroStrategy has benefited from Bitcoin’s recent surge, its future growth remains uncertain due to various factors at play.
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