MicroStrategy Stock Falls Nearly 50% in December but Leads Bitcoin-Tied Assets
Disclaimer: The analyst who wrote this piece owns shares of MicroStrategy (MSTR).
MicroStrategy's Stock Performance
MicroStrategy (MSTR) has experienced significant volatility, with its stock declining almost 50% since November. Despite this drop, it remains up 342% in 2024, marking the largest return among crypto-linked assets in traditional finance.
Market Influences
The year has been marked by geopolitical tensions, global elections, and advancements in artificial intelligence (AI), impacting financial markets. MicroStrategy's performance surpasses that of Nvidia (NVDA), which returned 185%, and Meta Platforms (META), which achieved 71%.
Bitcoin and Competitors
Bitcoin increased by 100% this year, driven by April's reward halving and January's approval of spot exchange-traded funds (ETFs) in the U.S. Bitcoin outperformed competitors such as ether (ETH), which rose 42%, and Solana (SOL), which gained 79%. The iShares Bitcoin Trust (IBIT) also reported over 100% returns, becoming the fastest ETF to reach $50 billion in assets.
Mining Sector Insights
Bitcoin mining stocks underperformed overall, with the Valkyrie Bitcoin Miners ETF (WGMI) rising just under 30%. However, notable individual companies like Bitdeer (BTDR) and WULF (WULF) saw gains of 151% and 131%, respectively. Mining stocks outperformed broader indices, including a 28% rise in the Nasdaq 100 Index (NDX) and a 25% increase in the S&P 500 Index (SPX).
Economic Context
Concerns regarding U.S. inflation and budget deficits contributed to a significant rise in U.S. Treasury yields. The yield on the 10-Year Treasury increased by 15% to 4.5%, gaining 100 basis points since the Federal Reserve began cutting interest rates in September. In contrast, the iShares 20+ Year Treasury Bond ETF (TLT) fell 10% this year and has lost 40% over the past five years.
Currency and Commodity Trends
The dollar strengthened, with the DXY Index rising to its highest level since September 2022. West Texas Intermediate (USOIL) ended the year nearly unchanged at around $71 a barrel after fluctuating significantly throughout the year.
Looking Ahead
As the new year approaches, attention will focus on the upcoming debt ceiling discussions, policies from President-elect Donald Trump, and the sustainability of U.S. economic growth.
