U.Today – MicroStrategy (MSTR), a business intelligence company, is in the news again. This time, there is speculation that the Michael Saylor-led company is planning to issue 10 billion MSTR shares to buy an additional $3 trillion worth of BTC.
Analyst dispels MicroStrategy rumors
Jeff Park, Head of Alpha Strategies at Bitwise Asset Management, gave reasons not to believe this speculation in a post on
In the first place, the number is staggeringly large. To Park, it seems ridiculous for a company to invest $3 trillion in an asset. Interestingly, the total market cap of Bitcoin currently at market price is less than $2 trillion. Hence, making such a move would be almost impossible, as MicroStrategy is valued at around $85 billion.
Beyond the surface, Park also addressed critical issues among some potential investors who have shied away from MSTR due to Bitcoin price fluctuations. He referred to a previous post explaining concerns regarding MSTR and its price performance compared to the cryptocurrency market.
Bitcoin Valuation and MSTR
It is worth noting that Park explained that MicroStrategy's massive investment in Bitcoin makes the value of the company's shares intrinsically tied to BTC. He noted that if MSTR drops to zero, the value of Bitcoin will be negatively affected.
However, he assured readers that even if Bitcoin falls to a record low of $30,000, MSTR will not collapse to zero.
Park highlighted that MicroStrategy has multiple capital expansion strategies and additional tools to win in the broader market. This is in line with a U.Today report, where Blockstream CEO Adam Back asserts that MicroStrategy shares are cheap, believing they are undervalued.
Furthermore, Park emphasizes that investors need to avoid falling with MSTR every time the price of Bitcoin declines. As of this writing, Bitcoin is trading 3.95% higher at $97,548 in a surprising market rebound.
