MicroStrategy’s Premium Over Bitcoin Likely Unsustainable

MicroStrategy’s (MSTR) current premium compared to its Bitcoin (BTC) holdings is not expected to persist, according to a recent report by Steno Research. The report argues that the diminishing impact of the company’s recent stock split and the introduction of options on spot Bitcoin ETFs in the U.S. will reduce investor interest in holding MicroStrategy stock over these new investment vehicles.

MicroStrategy, founded by Michael Saylor, carried out a 10-for-1 stock split in August, which has contributed to the stock’s recent surge. Steno Research noted that the premium on MicroStrategy’s stock, compared to the value of its Bitcoin holdings, has recently spiked to nearly 300%. This divergence from its underlying assets and business fundamentals could make the premium difficult to sustain.

As regulatory attitudes toward Bitcoin become more favorable, particularly if Donald Trump is re-elected, investors may be more inclined to hold Bitcoin directly instead of through MicroStrategy. Steno Research predicts strong Bitcoin performance through this quarter and into 2025, but suggests that this may not be enough to maintain MicroStrategy’s current valuation premium.

MicroStrategy’s premium was below 200% for most of the 2021 bull market, making the current surge appear unsustainable. The stock recently reached a new all-time high, having gained over 240% year-to-date. However, without higher buying demand, the stock’s elevated premium over Bitcoin may not hold up in the long term.

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