MicroStrategy (MSTR) has delivered remarkable returns for investors, surpassing Bitcoin’s performance after adopting a Bitcoin strategy.
The company, led by founder Michael Saylor, is now the most significant corporate holder of Bitcoin, with a return on its investment exceeding 36 times the acquisition cost. Despite the volatility of both assets, MicroStrategy stock has shown more vigorous growth in recent months.
Higher returns with MSTR
While Bitcoin has surged by 150% in value over the past year, MicroStrategy’s stock has climbed nearly 300%. The company’s significant Bitcoin holdings are a major factor in this growth. MicroStrategy owns approximately 252,220 Bitcoin, representing almost 1% of the total Bitcoin supply. The value of these holdings now forms around 46% of the company’s market cap. With a cost basis of $458 million for its Bitcoin, MicroStrategy’s returns have been over 1,000% since adopting its Bitcoin-centric strategy.
According to data from Bitcoin Treasuries and other sources, MSTR has outperformed other companies, including Nvidia, which has posted impressive returns in the S&P 500. In comparison, Bitcoin mining firms like Marathon and Riot have benefited from the rise in Bitcoin, but their performance remains secondary to MicroStrategy.
Volatility and Sharpe ratio
Despite its higher returns, MicroStrategy stock remains more volatile than Bitcoin. Portfolio Slab shows MSTR’s volatility at 25%, while Bitcoin’s at 14%. However, the Sharpe Ratio, a metric that evaluates investment returns relative to risk, shows that MicroStrategy offers a better risk-adjusted return than Bitcoin.
MSTR boasts a Sharpe Ratio of 4.70, compared to Bitcoin’s 1.73. This suggests that while MicroStrategy stock is riskier, it compensates investors with higher returns, making it a potentially more attractive investment for those with a higher risk tolerance. Investors may prefer MSTR over Bitcoin, particularly if they seek higher returns despite the stock’s increased volatility.
MSTR Vs BTC | Source: Portfolio Slab
The future outlook for MicroStrategy and Bitcoin
MicroStrategy’s success is primarily attributed to its Bitcoin strategy, which has driven much of its performance. As of September, public companies collectively held 361,735 Bitcoin, with MicroStrategy’s stake contributing significantly. Bitcoin’s price has fluctuated recently, but MicroStrategy stock has continued to rise, up 20-30% since March 2024. MSTR shares also spiked after the company announced additional Bitcoin purchases in September.
The company’s Q2 earnings, reported in August, showed another strong quarter due to its Bitcoin holdings. CEO Phong Le remains optimistic about the company’s future, focusing on both Bitcoin adoption and the growth of its cloud and AI software businesses.
Institutions increasingly engage with Bitcoin, with a large percentage involved through ETFs and ETPs. With Bitcoin gaining wider adoption, the future looks promising for cryptocurrency and MicroStrategy’s ongoing performance.