Strategy’s latest surge shows a sharp shift in market activity around the stock. Strategy [MSTR] opened at $136.58 before climbing steadily through the session, eventually closing at $153.92.
This resulted in a 16.39% gain based on the 54.67 million shares that were traded against its average of 20-24 million shares per day.
While both the magnitude of the price movement and the increased number of shares traded are indicative of significant activity relative to normal levels of trade volume. Still, this does not indicate that the price has been driven solely by low volume and thin liquidity.
Further, MSTR retained the majority of those gains until the end of the trading day. This indicated that there was enough purchasing interest present to maintain a tight spread throughout much of the day.
For Strategy to continue to generate further momentum, it would need to demonstrate sustained interest after the excessive volume spike experienced recently.
Bitcoin drives MSTR’s value
Behind MSTR’s rising equity value is a Bitcoin treasury worth roughly $69 billion. Strategy holds around 845,000 BTC, making Bitcoin’s price a key driver of its valuation.
Therefore, Strategy’s performance is largely driven by the price of Bitcoin [BTC]. When the price of Bitcoin goes up, so does the value of the Bitcoin treasury, which drives up the price of shares in MSTR.
Yet MSTR’s market value remains around $59 billion, below the estimated value of its Bitcoin holdings. This keeps its mNAV near parity, rather than at the large premiums seen in previous cycles.
Meanwhile, MSTR’s 16.39% daily gain shows how highly correlated MSTR may be to the movements of BTC. The way in which strategy holds Bitcoin creates an opportunity for increased exposure to BTC upswings.
However, the same structure makes MSTR more exposed to downswings in the price of Bitcoin.
