MSTR shares plunge after holdings worth more Bitcoin than its market cap

The market capitalization of Strategy (MSTR), the largest institutional holder of Bitcoin, has fallen to approximately $50.7 billion, while the value of its Bitcoin holdings is estimated to be approximately $60.4 billion, creating an unprecedented valuation gap.

This means investors are effectively getting the company’s Bitcoin at a below-market price, and its software business is trading at a negative price.

Even taking into account the company’s $8.2 billion in debt, the value of its net Bitcoin holdings is still higher than the current market value.

The separation comes amid a violent sell-off that has seen MSTR stock fall about 57% since October as rising margin requirements, increased short selling and the possibility of an MSCI re-rating put pressure.

Analysts believe the current situation is driven by external market factors rather than weakness in the company’s fundamentals.

In light of the turmoil, Strategy strengthened its cash position by adding $1.44 billion to fund its debt over 21 months.

But the statement about the possibility of selling some of its Bitcoin reserves sparked controversy in the digital currency community, with some seeing it as a pragmatic step and others seeing it as contradicting the “we will never sell” mantra.

Meanwhile, MSTR controls more than 3% of the Bitcoin supply, raising concerns about centralization risks and warning that increased buying could raise risk levels in the market.

Also read:

‘Strategy’ to accumulate Bitcoin and build cash reserves worth $1.44 billion: details

Is Ethereum really overvalued? What is the real price of currency?