As the price of Bitcoin continues to rise, Bitcoin Investor MicroStrategy (MSTR) has experienced a surge in its stock price exceeding 20% during the initial trading hours of March 4.
MicroStrategy experienced a surge in value from $1,079 at the close of trading the day before March 4 to $1,220, attaining an intraday peak of $1,339.
According to Andrew Kang, co-founder of Mechanism Capital, short positions occupied approximately 20% of the publicly available shares in MicroStrategy, or roughly $3 billion. Kang declared on X:
“I imagine a lot of that float is angry tradfi boomers trying to capture the premium to NAV [net asset value].”
Put differently, Kang posits that investors sought to capitalize on the escalating value of the stock relative to its net assets, with the expectation that the share price would thereafter decline.
Kang cautioned that an error in judgment might result in “that spread exploding in a mega squeeze,” analogous to the short squeeze that GameStop (GME) encountered in January 2021.
Over two weeks, the GameStop share price increased 1,500% by January 29, 2021. One month after reaching a peak of over $81, GME dropped to $13.
The average price at which MicroStrategy acquired an additional 3,000 BTC for a total of $155 million between February 15 and February 25 was $51,813; Saylor, the firm’s founder and chairman, announced the addition on X on February 26. The total value of these BTC purchases, which the company acquired for $6.1 billion at an average cost of $31,554, amounted to 193,000 BTC.
The value of MicroStrategy’s BTC holdings as of March 4, at a price of $66,332, is $12.8 billion.
Already, market observers were optimistic regarding MicroStrategy. Benchmark, an investment bank, published a market report on February 27 recommending MicroStrategy as a “buy” with a target price of $990. Additionally, Benchmark forecasts that the forthcoming halving of Bitcoin will increase the share price of MicroStrategy.
Saylor declared his eternal purchase of Bitcoin on February 20, citing its technical superiority to real estate, bullion, and the S&P 500.
At the time of writing, MicroStrategy was trading at $1,251, an increase of nearly 16% for the day.
