MicroStrategy Inc. (MSTR) experienced a sharp decline in its stock price yesterday, plummeting over 20% during intraday trading before closing down 16.2%. This significant drop occurred even as Bitcoin (BTC) surged to a new all-time high, just shy of $100,000. Despite the setback, MSTR remains up an impressive 479% year-to-date.

The stock’s tumble follows remarks from Andrew Left, founder of Citron Research, who expressed concerns about MicroStrategy’s valuation relative to Bitcoin fundamentals. “Now, with Bitcoin investing easier than ever (ETFs, COIN, HOOD), MSTR’s volume has completely detached from BTC fundamentals,” Left stated. “While Citron remains bullish on Bitcoin, we’ve hedged with a short MSTR position. Much respect to Michael Saylor, but even he must know MSTR is overheated.”

Is MicroStrategy Really Overvalued?

Contrasting Left’s bearish outlook, Charles Edwards, founder and CEO of crypto hedge fund Capriole Investments, offered a robust defense of MicroStrategy’s valuation. In an analysis shared on X, Edwards argued that the company’s current market capitalization and premium to its Bitcoin net asset value (NAV) are justified under certain conditions.

“Everyone thinks MicroStrategy is overvalued. It’s not,” Edwards stated. He suggested that if the current Bitcoin cycle mirrors the previous one—even under less favorable conditions—and if Saylor continues to aggressively acquire Bitcoin, then MicroStrategy has substantial growth potential. “Saylor needs to buy Bitcoin more aggressively the wider their NAV premium is. The 21/21 plan won’t do anymore as the market has already priced it in,” he noted.

Edwards emphasized the scale of recent capital raises, highlighting that “Saylor’s raised $9.6 billion in the last nine days alone.” He contended that with Bitcoin’s market capitalization poised to exceed $2 trillion, there’s a significant audience of bond traders who cannot directly access Bitcoin due to investment mandates. “The U

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Author: Jake Simmons