MSTR stock falls 5% as premium plummets to 1.6 after BTC price drop
Strategy, formerly MicroStrategy, saw its stock MSTR fall more than 5%. Not only that, the ratio of MSTR’s market capitalization and its Bitcoin holdings has fallen to 1.6 after BTC dropped below $90,000.
According to data on Yahoo Finance, Strategy’s stock has gone down by 5.65% in pre-market trading. Strategy’s price stands at $282.76 upon today’s stock trading close at 16:00 PM EST. The plummet in Strategy’s stock was believed to be triggered by Bitcoin (BTC)’s price drop, which plummeted as low as $87,630 on Feb. 25.
Bitcoin’s fall not only impacted Strategy’s stock price, but also its premium ratio. Michael Saylor’s firm has long held close ties with Bitcoin, as it is famous for being the largest corporate holder of BTC. The software developer company has owned more than 2% of BTC’s total supply since late 2024. Recently, it purchased 20,356 Bitcoin, worth nearly $2 billion at the time of purchase.
Unfortunately for the firm, crypto analyst Miles Deutscher said Strategy may have to hold back from its Bitcoin shopping spree following the recent price plunge.
Based on Deutscher’s analysis, MSTR’s premium market cap to Bitcoin holdings ratio has fallen far from its peak of 3.4 in November to only 1.6 on Feb. 25. This means that the stock’s market value is now closer to the actual value of its Bitcoin holdings, instead of being elevated by high prices.
“The lower this number goes, the harder it will be for Saylor to raise more capital for BTC purchases,” said Deutscher in his recent post.
As a result of the Bitcoin price drop, the company will have a harder time issuing shares or using its stock to generate the funds needed to buy more Bitcoin if BTC does not rebound anytime soon. Furthermore, investors will not be willing to pay more than the current intrinsic value of Bitcoin, thus limiting Saylor’s ability to raise capital.
As previously reported by crypto.news, Bitcoin fell by 6.78% on Feb. 25. Matrixport analysts warned BTC could experience a deeper decline, especially with low trading activity limiting demand for dip-buying.
