Steno Research: MicroStrategy's current premium of nearly 300% relative to its Bitcoin reserves is unlikely to be sustained

2024-10-28 17:44:00

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ChainCatcher news, Steno Research stated in a report on Friday that MicroStrategy (MSTR) is unlikely to maintain its premium relative to Bitcoin (BTC).

Analyst Mads Eberhardt wrote, "The effect of MicroStrategy's recent stock split is gradually diminishing, which further reinforces this belief. The introduction of spot Bitcoin exchange-traded fund (ETF) options in the U.S. will also reduce investors' motivation to hold stocks instead of ETFs."

Steno pointed out that the company's premium relative to its Bitcoin reserves recently soared to nearly 300%. This indicates that the company's valuation "is significantly disconnected from a direct calculation of its assets and business fundamentals." Steno noted that as regulators become more favorable towards Bitcoin and cryptocurrencies, investors may opt to hold Bitcoin directly rather than MicroStrategy stock. If Donald Trump is re-elected, this regulatory trend is expected to continue.

The report stated that Bitcoin is expected to perform strongly this quarter and in 2025, which means "higher buying demand is needed to sustain MicroStrategy's current premium." The existing premium of MicroStrategy is unsustainable, especially considering that during the cryptocurrency bull market in 2021, its premium was below 200% for most of the time.

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