Microstrategy's Shares Are Up Almost Four Times Due To Bitcoin ETF Frenzy

In 2023, MicroStrategy (MSTR) had a 350% increase in stock price, mostly because of anticipation surrounding the US government's approval of a spot Bitcoin exchange-traded fund (ETF). As of this writing, MSTR is up 8.3% intraday at $654 in trade.

The company's stock performance is supported by its significant exposure to Bitcoin (BTC). According to a Cointelegraph investigation, MicroStrategy and its subsidiaries own 189,150 BTC, with a total purchase price of almost $5.9 billion and an average buying price of $31,168 per BTC.

Because of MicroStrategy's exposure to the cryptocurrency, some analysts have dubbed the company's shares "basically a leveraged Bitcoin ETF". The company has financed its Bitcoin acquisitions using a combination of long-term, low-interest debt and share issuance, according to a Seeking Alpha analysis based on the company's quarterly profits.

As of September 30, MicroStrategy had long-term liabilities of $2.180 billion and total liabilities of $2.534 billion, a 7.7% decrease from the previous year.

December 2025 is when the senior convertible notes are due. Saylor believes that the company's treasury should be placed in a liquid asset that is not subject to sharp supply inflation rather than saving in a fiat currency that is always depreciating, according to the research.

Companies utilize senior convertible notes as one kind of financial instrument to raise money.

MicroStrategy offers cloud-based services, mobile apps, and business intelligence. Its primary offering is a platform for data analytics that companies use to see their data. The company's balance sheet is becoming increasingly vulnerable to the risks and volatility of the cryptocurrency markets due to its increasing exposure to Bitcoin.

The price of cryptocurrencies is also being driven by the possibility of spot BTC ETF trading on Wall Street. Even with the tight macroeconomic environment and challenges facing the cryptocurrency sector, the price of Bitcoin has increased by over 160% in 2023, outpacing that of other traditional assets. Spot trading refers to the instantaneous purchase or sale of Bitcoin at the going rate.

Major companies like Fidelity and BlackRock are in the running to be allowed to trade Bitcoin spot through exchange-traded funds (ETFs) when the U.S. Securities and Exchange Commission makes its decision in early January. By making Bitcoin available to a larger range of investors, approval may increase the cryptocurrency's value and market liquidity.