MicroStrategy's Stock Surges as Bitcoin Targets $100,000, What's Next?

Additionally, the trading volume and open interest (OI) for MSTR options are also rapidly soaring, with open interest reaching a six-month high, approaching 2.15 million. This indicates that trading sentiment for the stock is becoming increasingly frenzied. Additionally, the current Put-Call Spread (-14.9), measured by the difference between the implied volatility of 25-Delta Put and 25-Delta Call, is significantly below its 20-day moving average (-7.3), indicates that market sentiment is very bullish on MSTR.

Options contracts expiring on Friday have a large concentration of call options at the $500 and $530 levels, which are respectively about 5.5% and 12% higher than the current stock price. This indicates that the options traders believe MSTR has further room to rise.

Source: moomoo

MicroStrategy is accelerating its pace of Bitcoin buying by increasing the amount of convertible notes to $2.6 billion, which was upsized from a previously announced offering of $1.75 billion aggregate principal amount of notes.

This signals bullish expectations for Bitcoin's potential to surpass the $100,000 mark. Some analysts, including Ryan Lee, chief analyst at Bitget Research, said, “If history repeats itself and Bitcoin prices grow as projected, a 14.7% increase from the current price level will push the coin well above the $100,000 target for the month. The post-halving cycle trend is also very positive when projecting the future of Bitcoin.”

“MicroStrategy is effectively a levered play on Bitcoin and the outperformance of its shares relative to Bitcoin is the product of that approach,” said Benchmark Co. analyst Mark Palmer.

MicroStrategy co-founder Michael Saylor said on an October call with analysts that the company plans to accelerate its treasury operations and acquire Bitcoin continually with the goal of having 1.5 times the leverage of Bitcoin.

As of Nov. 17, MicroStrategy and its subsidiaries held an aggregate of approximately 331,200 bitcoins, which were acquired at an aggregate purchase price of approximately $16.5 billion, the company said in the SEC filing. The future stock price of the company will be highly correlated with Bitcoin.

MicroStrategy's Executive Chairman, Michael Saylor, remains bullish on Bitcoin. Saylor is doubling down on his Bitcoin strategy, and has emphasized that the company will raise $42 billion over the next three years, which will be used to make additional BTC purchases.

BTIG raised the firm’s price target on MicroStrategy to $570 from $290 and keeps a Buy rating on the shares. MicroStrategy’s “21/21 Plan” that was announced on October 31 and entails the company raising $4B of capital to acquire additional bitcoin “is off to a fast start,” the analyst tells investors in a research note.

However, MSTR's current bitcoin holdings are valued at approximately $32.49 billion, while its own market value has soared to $106 billion. This represents a premium of three times the value of the bitcoin, posing a risk for investors who may be paying an excessive premium.

Source: Bloomberg, Reuters