George Soros called it Reflexivity, but most know it as a virtuous circle, and MicroStrategy’s at the moment has been broken.
Updated Dec 31, 2024, 1: 02 a.m. UTCPublished Dec 30, 2024, 3: 32 p.m. UTC
In retrospect, it was inevitable.
Down more than 8% and holding just above $300 on Monday, MicroStrategy (MSTR) shares are now lower by about 30% since just after the announcement of their inclusion into the Nasdaq-100 index and nearly 50% from their late November record high.
The signs of at least a major short-term top in one-time barely known enterprise software company turned juggernaut Bitcoin Development Company were everywhere.
First among those signals was the rocketing stock price — at its high of $543 in late November, MSTR was up nearly eight-fold in 2024 and more than a 50-bagger since the company began buying bitcoin (BTC) in August 2020.
There was also founder and Executive Chairman Michael Saylor — never shy about promoting his company’s prospects and evangelizing for Bitcoin — who late this year had somehow become even more ubiquitous on the financial news, podcast and social media carousels.
It wasn’t just the constant appearances, but subtle changes in Saylor’s attitude to what might charitably be described by U.S. sports fans as “spiking the football” following a touchdown. Among them was the constant promotion of the MicroStrategy-invented key performance indicator of “bitcoin yield,” which recalled late 1990s made-up internet bubble metrics like “page views.” His company flush with cash from share and convertible debt sales, Saylor — for reasons unknown — late in the year also got in the habit of teasing announcements of sizable new bitcoin purchases on the Sunday prior to the official regulatory filing on Monday morning.
And then there was the emergence of copycats. Despite years of the obvious success of Saylor’s bitcoin treasury strategy, there had been a decided lack of other publicly traded corporates adopting the same. Yes, a few — even large-caps like the Elon Musk-led Tesla and Jack Dorsey-led Square — had dipped their toes into bitcoin acquisition. No other company of note, though, was willing to not only adopt bitcoin as their main treasury asset but take advantage of willing markets to raise additional capital with which to accumulate tokens.
That changed in a sizable way this year however, with small cap medical device maker Semler Scientific, Japan hotel operator Metaplanet, and a number of bitcoin miners among those embracing the Saylor vision — each of them earning social media plaudits from Saylor with every capital raise and bitcoin purchase announcement.
If something cannot go on forever, it will stop
Not content with being maybe the greatest trader ever and accumulating many billions of dollars, George Soros wanted to be known as a great thinker. It’s no coincidence that his magnum opus on trading — the Theory of Reflexivity — sounds suspiciously similar to a famous theory from a fellow named Ein