MicroStrategy Faces Historic Market Cap Decline Amid Bitcoin Volatility

According to Cointelegraph, MicroStrategy has experienced its largest four-day market capitalization drop in history, raising questions about its role as a leveraged Bitcoin investment vehicle. The company's market value plummeted by over 35% from its peak on November 21, wiping out more than $30 billion. This significant decline was highlighted by the Kobeissi Letter in a post on November 26, noting the massive drop in MicroStrategy's stock, MSTR. The decline in MicroStrategy's stock price coincided with a short-term correction in Bitcoin (BTC) prices. As of 9:52 am UTC on November 27, MicroStrategy's stock had fallen over 7.5% in the previous 24 hours, trading at $354.1, according to TradingView data. This downturn followed Bitcoin's correction after reaching a record high of approximately $99,800 on November 22. Since then, Bitcoin has decreased by over 7%, while MicroStrategy's stock has dropped more than 14%. Despite the recent volatility, both Bitcoin and MicroStrategy have shown strong performance over a broader timeframe. Over the past month, Bitcoin has increased by 44%, and MicroStrategy has rallied over 32%. On an annual basis, Bitcoin has risen by 146%, while MicroStrategy's stock has surged by more than 599%. Many investors view MicroStrategy as a leveraged bet on Bitcoin, anticipating that it will outperform the returns of the cryptocurrency itself. However, the recent 35% drop in MicroStrategy's stock, which is more than four times the correction seen in Bitcoin, has raised concerns about the volatility of its stock as a Bitcoin proxy. This growing volatility is attributed to an increasing number of retail traders, as noted by the Kobeissi Letter. On a single day last week, retail investors purchased approximately $42 million worth of MicroStrategy stock, marking the largest daily retail buy on record and significantly higher than the daily average in October. In the past week, retail investors have bought nearly $100 million worth of MicroStrategy stock, driven in part by the company's $2.6 billion note offering. Some of the world's largest traditional institutions are also investing in MicroStrategy, including Allianz, Europe's second-largest insurance provider, which acquired over 24% of MicroStrategy's $600 million note offering in March.