Key Points
- MicroStrategy plans to buy more Bitcoin using proceeds from its $500 million convertible notes offering.
- Despite market fluctuations, MicroStrategy’s stock has consistently outperformed Bitcoin, offering better short-term returns.
On June 13, MicroStrategy [MSTR] shared plans to increase its Bitcoin holdings using the profits from a $500 million convertible notes offering. These senior notes, a type of debt strategy, are due in 2032. The firm stated it plans to use the sales proceeds to buy additional Bitcoin and for general corporate purposes.
MicroStrategy has been using debt to increase its Bitcoin strategy. In April, the company bought an additional 122 BTC coins for $7.8 million, bringing its total holdings to 214,400 BTC valued over $14.5 billion at current market prices.
MicroStrategy’s Stock Performance
Despite other factors such as its addition to the MSCI Index and the upcoming inclusion in the Russell 1000 Index on June 28, MSTR’s stock has closely followed Bitcoin’s price action. However, it has often outperformed Bitcoin, making it a more lucrative short-term investment.
Even amidst market downturns, MSTR’s market structure has remained strong. The price action has consistently been above the 100-day and 50-day Exponential Moving Averages (EMAs), indicating that MSTR’s short and long-term price trends are still robust.
The Relative Strength Index (RSI) has stayed above the mid-range, indicating above-average buying pressure. The stochastic RSI, which is nearing oversold territory, suggests a potential bullish reversal. If this happens, MSTR could bounce off the 50-EMA and aim for $1800 or $2000.
However, if Bitcoin incurs more losses, MSTR’s stock could be pulled down to the 100-EMA ($1256). The Average Directional Index (ADX) reading below 20 indicates a lack of trend and suggests traders should proceed with caution.
Despite market volatility and price consolidation over the past three months, MSTR has consistently offered better returns than Bitcoin. As of now, on a monthly adjusted basis, MSTR has provided +30% gains compared to Bitcoin’s +7% over the same period. This means MSTR has offered nearly four times more returns than Bitcoin.
