Overview
-MicroStrategy is an American company that provides business intelligence, mobile software and cloud-based services.
-The company currently owns 0.79% of the circulating supply of Bitcoin (or 1 in every 127 Bitcoins).
-Since their first purchase in August 2020, the stock price has been strongly correlated with the Bitcoin price.
What is MicroStrategy?
MicroStrategy is an American company that offers business intelligence, mobile software and cloud-based services. It has recently made headlines due to its large investments in cryptocurrencies such as Bitcoin. Currently, it owns 0.79% of the circulating supply of Bitcoin (or 1 in every 127 Bitcoins). This equates to 15.3% of all coins created since they began buying them in August 2020.
Price Correlation
Since its first purchase, there has been a strong correlation between MicroStrategy’s stock price and the price of Bitcoin. On average over the past three years, their revenue was $497 million with an EBITDA of $50 million – both dwarfed by their investment in cryptocurrencies like Bitcoin. The chart below illustrates how closely linked these two assets are:
Risks Involved
Despite this strong correlation between stocks and crypto prices, there are still risks involved when investing in MicroStrategy’s stock which investors should be aware of. These include violating the “not your keys not your coins” mantra as well as a centralisation of wealth due to its ownership of 0.79% of the total circulating supply of Bitcoin.
Conclusion
For those unable to buy crypto directly themselves but still wanting exposure to it, investing in Microstrategy may be one way to achieve this – however investors must be aware that there are additional risks associated with doing so compared with owning cryptocurrency directly themselves.