- MicroStrategy (MSTR) witnessed a remarkable 20% surge in its stock price on March 4, with a retained gain of over 15% by midday.
- The surge follows MicroStrategy’s active investment in Bitcoin (BTC), with the company adding 3,000 BTC to its holdings between Feb. 15 and 25.
- Market analysts, including Mechanism Capital co-founder Andrew Kang, suggest potential short squeezes as short positions lock in about 20% of MicroStrategy’s publicly available shares.
MicroStrategy’s Bullish Rally: A Bitcoin-Driven Surge
In the early hours of March 4, MicroStrategy’s (MSTR) stock soared by over 20%, maintaining a gain of 15% by midday in the United States trading session. This surge comes in tandem with MicroStrategy’s active involvement in the Bitcoin market, having recently added 3,000 BTC to its holdings between February 15 and 25, totaling $155 million at an average price of $51,813.
Short Squeeze Warning: Potential Market Dynamics at Play
Mechanism Capital co-founder, Andrew Kang, highlighted an interesting market dynamic, noting that approximately 20% of MicroStrategy’s publicly available shares, valued at around $3 billion, are locked into short positions. Kang warns of a potential scenario reminiscent of the GameStop short squeeze, cautioning against miscalculations that could lead to a significant spread increase, creating a “mega squeeze” situation.
Market Outlook and Analyst Predictions
As of March 4, MicroStrategy’s BTC holdings, with Bitcoin priced at $66,332, are valued at $12.8 billion. The company’s stock price surge aligns with market optimism, as Benchmark, in a February 27 report, labeled MicroStrategy as a “buy” with a target price of $990. Benchmark’s analysis also anticipates that the upcoming BTC halving will further contribute to MicroStrategy’s positive share price performance.
MicroStrategy’s founder and chairman, Michael Saylor, has been vocal about his long-term Bitcoin investment strategy, emphasizing the cryptocurrency’s technical superiority over traditional assets like gold, real estate, and the S&P 500. As of the time of writing, MicroStrategy’s stock is trading at $1,251, marking an impressive 16% increase for the day.