Bitcoin’s price has had one of its biggest corrections since the bull market started, and has since struggled to recover $ 50,000. But the scenario is nowhere near as bad for the cryptocurrency as it is for one of its biggest supporters.
Although the company’s stock price initially benefited from the purchase of BTC, it was not enough to prevent the realization of profits and an eventual 58% correction at MicroStrategy. See why this may be happening and what it can also say about the current trend in the crypto market.
MicroStrategy shares drop 50% after buying more and more BTC
One of the biggest catalysts for kick-starting the most recent Bitcoin bullish race was undeniably when MicroStrategy first revealed that it had purchased a sum of BTC to add to its corporate treasury reserves. Since then, others have followed suit, and CEO Michael Saylor doubled and tripled in his initial purchase.
The price per BTC has increased accordingly, from just over $ 10,000 to almost $ 50,000 today. Along with the price of Bitcoin, MicroStrategy’s shares rose almost as strongly as investors used the company to gain exposure to the cryptocurrency, and also bet heavily on the brand that resurfaced.
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But, as Bitcoin started to correct itself amid an uncomfortable macro environment, MicroStrategy’s shares fell 58%. The graph appears to show a parable that is now broken, suggesting that the correction is not nearly complete.
MicroStrategy has nosedived by more than 50% since an early Feb peak | MSTR on TradingView.com
Could Bitcoin fall into the Saylor Effect?
As to why MicroStrategy is suffering so much, it may be due to the nervousness of the stock market, which left the crypto market unscathed. However, it can be a sign of things to come.
The orange line superimposed behind the MicroStrategy chart above is Coinbase’s BTCUSD price chart. Not all of the peaks and troughs have gone perfectly, but the path is close enough to suggest that there may be some correlation between the two.
If there is a correlation, either Bitcoin is about to correct another 20 to 25% or there is something else going on. As to what other reasons there may be for the divergence, this may boil down to more ways of becoming exposed to BTC now in traditional markets than it was a year ago.
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Another alternative is that CEO Michael Saylor’s BTC buying spree may be starting to be seen as irrational, and former believers are now abandoning the boat. Saylor, who now adorns “laser eyes” on Twitter, is one of the biggest supporters of cryptocurrency, but he doesn’t always place bets at the right time – although the technology he bets on is guaranteed.
Saylor was once considered the biggest loser of the dot-com bubble, but in the end the internet was widely adopted. Few argue that Bitcoin will eventually do the same, but could this scenario that hit Saylor in the past be happening again?
Featured image from Deposit Photos, Charts from TradingView.com