Key Points
- Kerrisdale Capital claims MicroStrategy’s shares are overpriced due to an ‘unjustifiable premium’ to bitcoin.
- The investment firm argues that the availability of financial instruments like ETFs has changed the investment landscape.
Investment firm Kerrisdale Capital has stated that MicroStrategy’s shares are overvalued.
The firm is long on bitcoin but short on MicroStrategy, which it views as a proxy for bitcoin trading at an unwarranted premium.
MicroStrategy’s Stock Surge
MicroStrategy’s shares have skyrocketed due to the recent rise in bitcoin’s price.
Kerrisdale Capital has short positions in MicroStrategy’s stock and stands to benefit if its value decreases.
MicroStrategy’s shares recently reached a new all-time high, surpassing $1,900.
Impact of ETFs
Kerrisdale Capital’s argument hinges on the increased availability of financial instruments that act as proxy investments for bitcoin.
The firm contends that MicroStrategy’s shares are no longer a unique way to access bitcoin.
Bitcoin can now be easily accessed through brokerages, crypto exchanges, and low fee ETPs and ETFs.
In January, several spot bitcoin ETFs began trading and quickly attracted billions of dollars in fresh capital.
These ETFs are offered by traditional financial institutions like BlackRock and Fidelity and have registered over $150 billion in cumulative trading volume.
Meanwhile, MicroStrategy has continued its strategy of accumulating bitcoin, currently holding approximately 214,250 bitcoin, around 1% of the cryptocurrency’s total supply.
Before MicroStrategy started buying bitcoin, its market capitalization was just over $1 billion.
Now, its market cap is nearly $32 billion, despite its bitcoin holdings being worth only $15 billion.
Kerrisdale Capital, which is short on MicroStrategy and long on bitcoin, also holds long positions in both BlackRock and Fidelity’s spot bitcoin ETFs.