Comparing MSTR and BTC: Market Opportunities and Risks

After the election, Bitcoin's price reached an all-time high of nearly $100,000, currently hovering around $98,000. This prompts the question: how did MicroStrategy's stock perform during this period? As expected, the stock also reached a post-election high, exceeding $500, before experiencing a 22% drop due to concerns over the company's valuation. The noise surrounding the stock sparked interest in exploring potential market opportunities and understanding the value of owning MSTR versus BTC. The correlation between MSTR and BTC is relatively high, around 65%, with MSTR being highly levered due to its significant BTC holdings. While MSTR runs a profitable business intelligence operation, its stock is prone to price moves based on the underlying business and BTC leverage. The strong correlation and oversized exposure to BTC raise questions about potential trades, including mean reversion opportunities.