Bitcoin Proxy MicroStrategy Questions Own ‘Premium’ With ETFs Looming

MicroStrategy Inc. Chairman Michael Saylor’s strategy of buying Bitcoin may be coming into question as the advent of exchange-traded funds holding the largest cryptocurrency appears imminent.

Saylor has turned the once struggling software company into a Bitcoin proxy for equity investors by accumulating more than $5.5 billion of the cryptocurrency since the middle of 2020. During that time, shares of MicroStrategy have more than tripled as Bitcoin surged in value. The benchmark Standard & Poor’s 500 Index gained about 40% during the same period.

Now with the US Securities and Exchange Commission seeming likely to approve ETFs that invest directly in Bitcoin after a key court loss earlier this year, investors and analysts are beginning to debate whether MicroStrategy’s shares will continue to command a premium. Even MicroStrategy, which releases quarterly results later Wednesday, has raised the question in a recent filing.

“To the extent that our Class A common stock is viewed as an alternative-to-Bitcoin investment vehicle and trades at a premium to the value of our Bitcoin holdings, that premium may also be eliminated, causing the price of our Class A common stock to decline,” the Tysons Corner, Virginia-based company wrote in an Aug. 1 filing.

Michael Saylor, chairman of MicroStrategy, during an interview at the Bitcoin 2023 conference in Miami Beach.