MicroStrategy’s largest corporate Bitcoin holder has seen its $30 billion market capitalization eroded in just under four days, a six-figure sum, its biggest decline on record. Bitcoin’s recent correction reignites debate about whether the company is a leveraged Bitcoin investment vehicle.

The company’s market value collapsed by more than 35% from its Nov. 21 peak after the Kobeissi Letter pointed out the sharp fall in a Nov. 26 post on X, formerly Twitter. MicroStrategy shares dropped 7.5% in 24 hours, trading at $354.10 as of 9:According to TradingView data, 52 AM UTC on Nov. 27.

The Bitcoin Correction Hits MicroStrategy Harder

Finally, the stock’s decline mirrored Bitcoin’s retreat from a historical high of $99,800 on Nov. 22. While Bitcoin corrected modestly, MicroStrategy’s stock tumbled more than four times as much as the cryptocurrency’s price swings were amplified.

Although Bitcoin and MicroStrategy have had impressive annual gains, this week’s setback means both offer investors their usual caution. The growth of Bitcoin year to date of 146% has exceeded MicroStrategy’s 599% growth as investors flock to the stock and are betting it as a leveraged bet on the digital currency.

Retail investor activity is said to be behind MicroStrategy’s intensified volatility. Within the past week, retail traders have been buying nearly $100 million of MicroStrategy stock, with the company likely tapping into its ongoing $2.6 billion convert note offering.

“The story of MicroStrategy is the story of how increasing involvement of retail investors has made the company more volatile than Bitcoin itself,” the Kobeissi Letter noted.

MicroStrategy still has a lot of institutional money behind it. In March, Europe’s second-biggest insurance provider, Allianz, purchased a 24 percent stake in the company’s $600 million note offering.

WOW.

MicroStrategy stock, $MSTR, just fell a MASSIVE -35% from its peak seen on November 21st.

That's ~$30 BILLION of market cap erased in 4 trading days as #Bitcoin fell ~9% from its high.

This is one $MSTR's largest 4-day drops in history.

What just happened?

(a thread)

— The Kobeissi Letter (@KobeissiLetter) November 26, 2024

Despite Meta still being a high-stakes Bitcoin proxy for MicroStrategy, its volatility and the risks that follow its business model are extremely pronounced. MicroStrategy is watching the markets to see how Bitcoin stabilizes and its value recovers. Investors will watch closely to see if it can recover or continue sliding into more volatile prices based on retail speculation.

Bitcoin’s trajectory and broader adoption trends will most likely dictate the company’s story, and its stock will attract both crypto enthusiasts and traditional investors.