MicroStrategy Erases 2-Month Loss as Crypto Stocks Rally: Is the Damage Over?

Strategy, the company once called MicroStrategy (MSTR), rose 6.9% to $111.14 on Thursday afternoon. That is its best price since June 18, which wipes out a two-month slide. The stock market has forgiven the company. The balance sheet has not. MicroStrategys Bitcoin is still worth billions less than it paid. MicroStrategy (MSTR) Stock Performance. Source: Yahoo Finance How MicroStrategy Clawed Back Two Months MSTR traded at $111.45 as of 3.05 p.m. ET, up 6.91% from Wednesdays $104.25 close. The shares had bottomed at $81.81 in late June. That is a 35.9% climb off the floor. July never produced a close above $101.95, so Thursdays move clears the whole summer. The fuel came from Bitcoin topping $70,000, marking the first time in 78 days. The token had not held that level since early June. Two decisions in Washington did the heavy lifting. On Wednesday the Treasury doubled the size of its long-end bond buybacks. Each operation will now buy at least $4 billion from Sept. 9. A day earlier, the Securities and Exchange Commission (SEC) proposed Regulation Crypto Assets. The rule would let crypto firms raise up to $75 million a year without full registration. Short sellers were caught out. Traders covered roughly $1.5 billion of bearish bets, including $700 million inside one minute. a quiet form of quantitative easing, a move that weakens the dollar and sends scarce, debasement-hedge assets like Bitcoin higher, Matt Mena, crypto research strategist at 21Shares, on the Treasury move. The Bitcoin Stack is Still Underwater Strategy holds 840,447 bitcoin. It paid an average $75,385 per coin, or $63.36 billion in total, according to its own ledger. At $69,803 that pile is worth $58.67 billion. So the company sits about $4.69 billion in the red. Bitcoin has to rise another 8% before the treasury breaks even. The gap already forced a change of habit. Strategy bought its first 21,454 coins on August 10, 2020, paying $11,652 each. The ledger records no sales at all until this year. Then came four of them. The company sold 6,916 bitcoin between June 30 and August 10, at prices from $59,256 to $64,262. Measured against its average cost, that booked roughly $92 million in real losses on less than 1% of the stack. The paper damage is far larger. Strategy reported an $8.22 billion second quarter net loss in July. It has also paused new bitcoin buying, raising $333.7 million last week without adding a single coin. In February, management spelled out its own breaking point in a deep bitcoin crash. Which Crypto Stocks Really Got Back to June The rebound was broad, but it was not equal. BitMine, an ether treasury company, leads the group by a wide margin. Circle has climbed back above its June 18 level. Coinbase beat every June close, yet it trails its July 21 peak of $175.85. Bitdeer is the outlier. The miner rose 8.57% and stays 41.7% below June. The split is telling. Money returned to the treasury companies and the exchanges, which move with bitcoin most directly. It has not returned to the miners. Big investors were already positioned. Twelve of the 15 largest MSTR institutional holders added shares in the second quarter, while the stock was falling. COIN, CRCL, BMNR, and BTDR Stock Performances. Source: TradingView its a compelling time for investors with longer-term horizons to be allocating to Bitcoin and the crypto asset class, said Zach Pandl, head of research at Grayscale. One number decides whether this holds. Bitcoin must reach $75,385 for Strategys treasury to turn green again, and for Michael Saylor to start buying without booking a loss.