MicroStrategy and the Trump Trade: Bitcoin’s Ascent Fuels a Market Surge
- peachgardenpartner
- Jan 25
- 5 min read
By Zhenyu Li
Key Takeaways
Bitcoin holdings have increasingly become the dominant driver of returns.
The correlation and interaction between the equity and Bitcoin is asymmetric.
Investors are cautiously optimistic about the company in the long run.
Introduction
Under the successful election of Donald J. Trump in 2024, the U.S. Stock Market as well as cryptocurrency market continued their bullish trends. One unique company that is highly correlated in both markets and achieved huge attention is MicroStrategy (MSTR).
As of January 2025, MicroStrategy holds approximately over 150,000 Bitcoin, making it the largest corporate holder of Bitcoin even larger than BlackRock, the world’s largest asset management company. With such huge position in the crypto market, the stock surged from around $222 to its prime at $473 in nearly 16 days. This report will take a closer look at the company’s strategy and future trends.
Overview of the Stock
Company Snapshot
Name: MicroStrategy Incorporated
Ticker: MSTR
Industry: Business Intelligence, Software
Market Cap: $4.8 billion (as of January 2025)
Share Price Performance (YTD): +359%, relative to benchmark index (S&P 500)
Business Overview:
MicroStrategy Incorporated is a leading provider of business intelligence (BI) software solutions and services, with a particular focus on analytics, data visualization, and reporting. The company offers a range of products that help organizations turn large volumes of data into actionable insights, enabling better decision-making and business strategy.
Meanwhile, MicroStrategy includes Bitcoin as a primary financial asset. This approach is unconventional, as it integrates cryptocurrency investment with its core business, allowing the company to grow its Bitcoin holdings while maintaining its software services. At present, Bitcoin serves as both investment and payment option for the corporation’s products and services.
Recent Developments
Key News and Events
Pioneering Corporate Bitcoin Strategy (2020 Onward): In 2020, under the leadership of co-founder and executive chairman Michael Saylor, MicroStrategy became a trailblazer in integrating Bitcoin into its corporate treasury strategy. This decision marked it as one of the first public companies to adopt cryptocurrency as a key financial asset. The rationale behind this move was to hedge against inflation and capitalize on the long-term value appreciation of Bitcoin, which was seen as a "digital gold." This strategic pivot not only redefined MicroStrategy's corporate narrative but also solidified its reputation as a forward-thinking entity in the financial and tech sectors.
Aggressive Bitcoin Acquisition (2023–2025): Building on its initial strategy, from mid-2023 to January 2025, MicroStrategy amplified its focus on Bitcoin acquisition. During this period, the company accumulated approximately 258,320 bitcoins, investing a staggering $22.07 billion. Notably, in 2024 alone, the company averaged a purchase price of $85,450 per Bitcoin, significantly higher than its earlier average cost basis of $29,582 per Bitcoin reported in Q3 2024. This aggressive acquisition strategy underscored MicroStrategy's commitment to cryptocurrency as a cornerstone of its financial strategy, further aligning its corporate performance with the volatile yet promising Bitcoin market.
Bold $42 Billion Capital Raise for Bitcoin Expansion (October 2024): In October 2024, MicroStrategy announced a strategic plan to raise $42 billion over three years, comprising $21 billion through equity offerings and $21 billion via fixed-income securities. This ambitious initiative is designed to significantly bolster the company’s Bitcoin holdings, reinforcing its position as the largest corporate holder of the cryptocurrency. By splitting the funding evenly between equity and debt, MicroStrategy aims to balance growth with financial stability, reducing the risk of excessive shareholder dilution while capitalizing on the potential long-term value of Bitcoin. The funds will also be utilized to enhance shareholder value through strategic investments and initiatives that align with the company’s dual focus on cryptocurrency and business intelligence.
Market Reaction
With the successful election, the price of Bitcoin and MSTR stock jumped simultaneously, achieving around 180% and 35% growth in respect.
The announcement of $42 billion capital plan is viewed as cautiously positive in investors, as there was no significant price variation after this surprising statement.
Financial Performance
Earning Highlights
The Q4 2024 Earning details have not yet been released until Feb 4, 2025. This leaves a blank for the most characteristic part. However, even before the election, the company had illustrated extremely profitable potential of 105% in Annualized Asset Performance since Aug 10, 2020 when MSTR implemented its bitcoin strategy, dramatically exceeding S&P 500 at 14%, according to the latest report (Q3 2024).
Segment Details (Q3 2024)
Revenues:
Total revenues were $116.1 million, a 10.3% decrease year-over-year.
Subscription Services Revenues were $27.8 million, a 32.5% increase year-over-year.
Product licenses and subscription services revenues were $38.9 million, a 13.6% decrease year-over-year.
Product support revenues were $61.0 million, an 8.7% decrease year-over-year.
Other services revenues were $16.2 million, an 8.0% decrease year-over-year.
Gross Profit:
Gross profit was $81.7 million, representing a 70.4% gross margin, compared to $102.8 million, representing a gross margin of 79.4%, for the third quarter of 2023.
Risks and Uncertainties
The equity price is now dramatically sensitive to BTC variation and related strategies instead of the company’s business changes. Hence, the author only provides some insights from BTC aspect.
Macro Aspect
Bitcoin, along with DeFi, is still not fully and widely accepted by investors and institutions around the globe. Some share the concerns that such coins waste countless energy while generating no value, criticising cryptos and predicting that such coins will eventually zero out. Meanwhile, the price of Bitcoin is tremendously sensitive to short-term policies and fundamental information and has obvious periodic variation due to its supply cap and halving mechanism (reduction of miners’ rewards for adding a new block for the blockchain by 50% every 4 years)
Company Aspect
The uncertainty in macro aspect is not the whole story. More severe problem is rooted in the interaction between BTC and MSTR. During the Trump trade 2024, the positively circular impact drove both to their prime, just like stepping on the right foot with the left foot and eventually flying into the sky. However, this does not always hold true, for example, when FOMO (fear of missing out) fades with time and markets return to its relatively rational state. More specifically, when the price of Bitcoin is retracing to lower interval, chances are that MSTR is unable to slow down or completely stop the declining trend. This is because Bitcoin affects MSTR in an overwhelming way, whereas MSTR is only one of the multiple price drivers of Bitcoin. In essence, asymmetric effect naturally exists, being the most unpredictable factor.
It is worth noting that, while the above analysis does point out some risks and uncertainties in the company’s future development, readers are also suggested to bear the average cost of MSTR’s Bitcoin in mind when evaluating the impact oof potential BTC variation on the corporation, which is merely $29,582 per BTC according to its Q3 2024 report.
Sources
MicroStrategy Incorporated: Q3 2024 Earnings Presentation | Explore MicroStrategy's Investor Relations
MicroStrategist Blog: From Blackouts to Breakouts: What’s Next for MSTR?