- Oh dear! Strategy’s stock and those cheeky leveraged ETFs have taken a tumble, all thanks to Bitcoin’s little correction and Trump’s latest tariff tantrum.
- Meanwhile, the firm’s “21/21 Plan” is aiming for a staggering $42 billion in Bitcoin investments. Ambitious, isn’t it? 😏
It seems the broader market has decided to throw a pity party following Donald Trump’s confirmation of new tariffs, and Strategy (formerly known as MicroStrategy) is right there, clutching its pearls.
Strategy’s stock takes a hit
Oh, the drama! The company’s stock has plummeted by a rather theatrical 16% year-to-date, mirroring Bitcoin’s ongoing melodrama. 🎭
As a major corporate Bitcoin holder, Strategy is currently sitting on approximately 499,096 BTC, valued at a staggering $43.7 billion. Quite the treasure trove, wouldn’t you say?
However, with an average acquisition cost of $66,350 per Bitcoin, the company is now feeling the heat as BTC struggles to regain its former glory. Talk about a financial soap opera!
The latest downturn has raised eyebrows about the resilience of institutional Bitcoin investments and whether Strategy’s aggressive accumulation strategy will pay off in the long run. The suspense is palpable!
In a rather cheeky remark, The Kobeissi Letter, a market analysis firm, noted,
Leveraged ETFs too face the brunt
The sharp downturn has sent shockwaves through leveraged ETFs tied to Strategy. Both MSTX and MTSU have plunged nearly 50% over the past five days. Oh, the humanity!
These ETFs, which were trading above $43 and $9 per share last week, have seen significant declines as trading volumes surged. A real rollercoaster ride!
At the time of writing, MSTX had dropped to $23.83 per share, while MTSU fell to a mere $4.94, according to Yahoo Finance. What a fall from grace!
Leveraged ETFs, designed to amplify returns through derivatives and borrowed capital, present higher profit potential but also come with increased risk, especially during market turbulence. It’s a high-stakes game, darling!
Geoffrey Kendrick, Standard Chartered’s Global Head of Digital Assets Research, noted that the current downturn aligns with a broader risk-off sentiment across traditional financial markets. This increases volatility in the crypto market. How thrilling!
Strategy’s Bitcoin plan
Since 2020, Strategy has been on a Bitcoin shopping spree, spending over $33 billion to acquire BTC at an average cost of approximately $66,000 per coin. Quite the extravagant affair!
This strategic investment has resulted in an unrealized profit exceeding $10 billion, according to MSTR Tracker data. A rather impressive feat, if I do say so!
The company has primarily funded these purchases through a combination of stock issuance and $9.5 billion in convertible debt. Nearly all obligations mature in 2027 or later. A long-term commitment, indeed!
This long-term debt structure significantly mitigates the risk of a forced Bitcoin liquidation during short-term price dips, according to The Kobeissi Letter, providing Strategy with a strong financial cushion amid market volatility. How very sensible!
“For this to happen, Bitcoin would need to fall well over 50% from current levels and remain there” until 2027 and beyond, they said.
Signs of hope
As the market shows signs of recovery, Strategy’s stock price may also rebound in the coming days. Fingers crossed! 🤞
On the 23rd of February, Michael Saylor hinted at potential Bitcoin acquisitions by sharing a BTC tracker on X (formerly Twitter), a move that has historically preceded major purchases. How mysterious!
This cryptic post has sparked speculation that recent Bitcoin transactions are yet to be reflected in Strategy’s holdings. The plot thickens!
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2025-02-26 22:20