Interest in MicroStrategy has surged after the company was included in the Nasdaq-100 index, and about $11m has been spent on its shares on Monday. This inflow—nearly trebling the average daily purchases recorded in the year to date—has happened in response to MicroStrategy, the largest company with bitcoin holdings, being included in the index.
MicroStrategy Joins Nasdaq-100, Sparks $11M Retail Investment Surge
The data by Vanda Research shows that more and more retail investors are moving to equities linked to bitcoin. Yet MicroStrategy has been sky-high this year—returning a Goliath 550%, while the favorite among street-savvy investors, Nvidia, gained only 160% in 2024. The performance places MicroStrategy as a growing player to retail investors interested in digital asset exposure.
Bitcoin’s use as an ‘unregulated’ financial asset has seen a devoted fan base among corporate backers. The head of MicroStrategy, Michael Saylor, has built a strong fan base on X (previously Twitter) that is actively promoting the company’s and its own vision of the crypto future. Thanks to him, the company has experienced an increase in its stock and creditworthiness among the retail investors.
Saylor’s promotion of bitcoin for use as a ‘store of value’ has delighted retail investors who believe in using the cryptocurrency as an inflation hedge and portfolio rebalancing tool. With support for his conviction from the company’s large bitcoin reserve, Saylor has turned MicroStrategy into what many direct investments in BTC would not want, effectively an investment in bitcoin.
Since more organizations, and especially IT ones, join the process of crypto movement popularity, MicroStrategy’s case may set the example for other companies that want to attract retail users. The sharp rise in investment shows the long-term integration of the traditional financial markets and the crypto space and the growing influence of retail investors.
MicroStrategy's Bitcoin Bet: Software Declines Amid Crypto Gains
MicroStrategy has had considerable growth, largely due to a massive increase in the price of bitcoin, which hit $100,000 for the first time recently. Many investors believe that the emergence of pro-cryptocurrency policies of the US President, Donald Trump, electrified the rate of bitcoin, making it popular. This change has made MicroStrategy a significant stakeholder in the crypto industry today.
While the company became famous for its massive BTC investments, MicroStrategy is, in fact, a business analytics software firm. However, the company’s stock has acted sometimes like an electronic version of bitcoin, with some analysts admitting that they have little idea how the company works on a day-to-day basis. ‘Many individuals probably have little understanding of what MicroStrategy does in business terms, and yet it has become the poster child for the stock market betting on bitcoin,” said Dan Coatsworth, an investment analyst at AJ Bell.
On one hand, the delivery of software products with bitcoins as an additional service has served as a blessing for the company, while on the other hand, several problems have been realized with the investment in bitcoins as a part of the business model. Currently, MicroStrategy released its third-quarter earnings report that addresses the company’s 10% decline in revenues within its software division. While its bitcoins helped skyrocket its stock price, the software side of the company remains lagging far behind.
This dual focus has led to a unique position for MicroStrategy: Essentially, it is a way for investors to invest in the so-called virtual currency market indirectly because its stock price rises and falls with the price of bitcoin. The ensuing bitcoin-accumulating campaigns have created a fan base of the crypto users; however, they have put the enterprise through criticism by critics regarding its continued usability.
However, these disturbances did not dampen MicroStrategy’s bitcoin plan as investors embrace the company’s long-term bet on the cryptos. Given the current and possible future bitcoin prices, the firm’s operational performance continues to be associated with the fluctuations in the cryptocurrency price for better or worse.
MicroStrategy's Stock Soars as Short Interest and Retail Inflows Rise
This is evident, especially given that the stock price of MicroStrategy has been having an extraordinary change with short interest declining dramatically. Short interest as of December 16 has been at 12.98% of the free-float market capitalization compared to 20.7% as of January 2024, Ortex data shows. A further decline in short interest can be expected to mean fewer traders holding short positions against the particular stock as other traders expect the latter to rise in the long run.
Short sellers often exit when their bets on a stock go wrong, and this indicates that those positions will be closed to bring about a rise in a stock price. This type of buying activity leads to a chain effect and sends the price to new heights. MicroStrategy has observed this sort of behavior where investors adjust their positions based on the company’s stock performance due to bitcoins.
Online traders have also been adding funds to MicroStrategy at a rate of $3.75 million per day this year, per Vanda Research. This is now excluding trades that took place through private banking or through retirement saving plans such as 401(k)s, which means the individual is being instrumental in powering further the movements experienced in the stock.
The strong retail interest marks MicroStrategy as not just a software company but more so as a means to investing in the more popular and risky asset class—crypto assets. Because bitcoin is growing in value, the company’s stock is an investment in the cryptocurrency market indirectly.
With short interest on the decline, high retail traffic, and the growth of BTC, MicroStrategy’s stock might go even higher. It is also well placed to capture flows from the more conventional institutional investors attracted to its prospects and from newcomers minted by the crypto revolution.
