What is MSTR? Why Do Investors View It As a Bitcoin Investment Opportunity?

If you’re looking for an indirect way to invest in Bitcoin without buying BTC directly, MicroStrategy (MSTR) could be an interesting option. Recently, industry experts have started to see MSTR not just as a regular software company but also as a “Bitcoin fund” traded on the stock exchange.

What Is MSTR and Why Is It Considered Important?

MicroStrategy (MSTR) is a long-established software technology company, but in recent years, it has transformed into a major Bitcoin investor. The company, owned by Michael Saylor—an advocate of maximalist Bitcoin ideology—currently holds a massive amount of Bitcoin. According to Saylor’s latest update, MicroStrategy has accumulated at least 189,150 BTC, worth about $13.4 billion at current prices (BTC trading at $71,080).

What makes MSTR special is the combination of its huge Bitcoin assets and its core software business. Analysts estimate the intrinsic value of its software division at around $2 billion, while its Bitcoin holdings generate separate value independently.

Valuation Analysis: Fairly Valuing MSTR

From Adam Back’s perspective—CEO of Blockstream—the total fair value of MSTR should be around $10.5 to $11.5 billion, combining both the software segment ($2 billion) and Bitcoin holdings ($8.09–$9.5 billion). Based on this, MSTR’s stock price should be approximately $625–$685.

In reality, MSTR hit $685 at the end of 2023, reflecting this view to some extent. However, after Bitcoin ETF funds officially launched in the US market in early 2024, the stock price dropped significantly to $482 in mid-January—a 30% decline from its peak.

This decline isn’t isolated. Other crypto-related companies also experienced similar sell-offs: Coinbase (COIN) down 15%, Cleanspark (CLSK) lost 33% of its value. The main reason is that the launch of Bitcoin ETFs has effectively reduced the demand for using MSTR as a “proxy tool” for Bitcoin investment.

Performance Comparison: MSTR vs. Direct Bitcoin

The question is: does MSTR perform better than Bitcoin itself? According to Fred Krueger—an analyst specializing in Bitcoin ETFs—even if BTC skyrockets to $200,000, MSTR might still perform worse than holding Bitcoin directly or even worse than BlackRock’s Bitcoin ETF (IBIT) with 1.3x leverage.

The reason is that MSTR has to cover operating costs of its software business, interest on debt, and other management expenses. The company currently owes about $2 billion, a debt that Adam Back suggests will “increase over time” as the company continues issuing new shares to buy more Bitcoin.

Why Does MSTR Still Attract Investor Attention?

Despite these challenges, MSTR continues to draw investor interest. Part of it is due to its strategic approach to Bitcoin—rather than simply holding BTC, Michael Saylor has turned MicroStrategy into a “leverage tool” for those seeking higher-risk Bitcoin exposure.

Additionally, from late 2023 to early 2024, the amount of Bitcoin held by MSTR increased by 36.11%, demonstrating the company’s long-term commitment to this strategy. This makes MSTR a hedge for those who believe in Bitcoin but want leverage through stock exposure.

Final Assessment: Is MSTR a Good Choice?

What is MSTR in today’s investment landscape? It’s not Bitcoin, but it’s also not a typical software stock. MSTR is a hybrid product—a combination of a real tech company and an unofficial Bitcoin fund. Choosing between MSTR and direct Bitcoin depends on your personal risk profile and your desired level of leverage.

Those seeking pure Bitcoin exposure with high liquidity might find Bitcoin ETFs a more effective option. However, investors who trust Michael Saylor’s long-term strategy and are willing to accept greater volatility may still see value in MSTR.