The stock price of MicroStrategy (MSTR) experienced a significant increase of more than 20% during early trading hours on March 4 in the United States. By midday, it maintained a gain of over 15%. MicroStrategy is actively involved in investing in Bitcoin (BTC).
After closing at $1,079 on the previous trading day, MicroStrategy opened at $1,200 on March 4 and reached a peak of $1,339 during the day.
According to Andrew Kang, the co-founder of Mechanism Capital, approximately 20% of MicroStrategy’s publicly available shares, valued at around $3 billion, were locked into short positions. Kang explained on X that investors aimed to take advantage of the stock’s increasing value compared to its net assets, with the assumption that the share price would eventually decrease.
Kang cautioned that miscalculations could result in a scenario where “that spread blows out in a mega squeeze,” similar to the short squeeze experienced by GameStop (GME) in January 2021. On January 29, 2021, the GameStop share price skyrocketed by 1,500% over a two-week period. However, within a month, GME plummeted from a high of over $81 to $13.
Between February 15 and 25, MicroStrategy added 3,000 BTC to its holdings, with an average purchase price of $51,813, amounting to a total of $155 million. This increased the company’s BTC holdings to 193,000 BTC, which were acquired at an average price of $31,554, totaling $6.1 billion, as confirmed by the founder and chairman, Michael Saylor, on X on February 26.
At a BTC price of $66,332, recorded on March 4, MicroStrategy’s BTC holdings are now valued at $12.8 billion.
There was already a bullish sentiment towards MicroStrategy among market watchers. In a market report released on February 27, investment banker Benchmark labeled MicroStrategy as a “buy” with a target price of $990. Benchmark also predicted that the upcoming BTC halving would further boost MicroStrategy’s share price.
On February 20, Saylor expressed his intention to continue buying Bitcoin indefinitely, stating that it is technically superior to gold, real estate, and the S&P 500.
At the time of writing, MicroStrategy was trading at $1,251, reflecting an increase of almost 16% for the day.
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