MicroStrategy shares fell 16% from $535 to $397 on Thursday before recovering to $425 at the time of writing.
MicroStrategy is a publicly traded business intelligence company founded in 1989 that pivoted to acquiring as much Bitcoin as possible in 2020. The company now holds well over 1% of all Bitcoin that will ever exist, with institutional interest in MicroStrategy being an interest in a regulatory-friendly Bitcoin investment.
For this reason, many may find it puzzling that this downturn follows Bitcoin approaching $100,000 for the first time. What may be even more puzzling is a recent X post by major investment firm Citron Research noting that the company decided to short MicroStrategy while going long on Bitcoin.
The rationale
Citron Research explains that it recommended investing in MicroStrategy with a $700 target four years ago. According to the company, “MicroStrategy was the ultimate way to invest in Bitcoin.”
Adjusting for share variations, those MicroStrategy shares have hit over $5,000, and Bitcoin has reached new heights. Still, with Bitcoin becoming more mature as an asset it is also becoming increasingly accessible:
“Now, with Bitcoin investing easier than ever […], [MicroStrategy]’s volume has completely detached from BTC fundamentals. While Citron remains bullish on Bitcoin, we’ve hedged with a short [MicroStrategy] position.”
The statement follows recent reports indicating that Major Wall Street companies are accumulating MicroStrategy shares as a way to gain leveraged exposure to Bitcoin. In the recent past, MicroStrategy’s performance significantly overtook the performance of the asset, which it is accumulating.
Many institutional analysts apparently disagree with Citron Research’s conclusion, considering that market data shows that nearly 56% of MicroStrategy shares are institutionally owned. Institutional MicroStrategy holders reportedly reached 721 — for a total of 102.4 million shares.
MicroStrategy chairman Michael Saylor recently announced that he will soon pitch investing in Bitcoin to the Microsoft board as well. He said that an activist arranged the meeting:
“The activist that put that proposal together contacted me to present to the board, and I agreed to provide a three-minute presentation — that’s all you’re allowed — and I’m going to present it to the board of directors.”
