The excitement around Bitcoin has spilled over beyond spot price, data shows, with MSTR going from above $1,300 to $629 in just 17 days.
The Bitcoin (BTC) price correction isn't just hurting individual hodlers — the biggest players are suffering in more ways than one.
Data from markets on March 5 revealed that MicroStrategy, which owns over 91,000 BTC, has seen its stock price dive by more than half in just three weeks.
On the day that the company confirmed that it had added another 210 BTC to its reserves at a cost of $10 million, MicroStrategy's stock hit local lows of $628. At its peak in February, MSTR traded at just over $1,300.
The volatility is a commentary on the ups and downs of Bitcoin in its latest bull run, which has been characterized by wild swings in both directions.$MSTR (red) vs. BTC/USD (blue) chart. Source: Tradingview
Since beginning to add Bitcoin to its balance sheet in August last year, however, the overall impact on MSTR remains transformative. Prior to the move, it barely traded above $100.
"They now hold 91,064 bitcoin on their balance sheet," Morgan Creek Digital co-founder Anthony Pompliano commented on the latest buy.
"This may be one of the greatest displays of conviction in public market history."
That "conviction" may serve the company well far beyond the short term as Bitcoin's bull cycle is being challenged by macroeconomic headwinds.
For Arthur Hayes, former CEO of derivatives giant BitMEX, central bank policy could, in extreme circumstances, cause capital to drain from cryptocurrency altogether.
The reason, he explained in a new blog post this week, is that the Federal Reserve could choose to hike rates, causing pain for investors across the board, but also see periods of record low rates, creating a swell of volatility.
"I do not have a model for an estimate of the ratio between the two, but at a high level if global fiat liquidity can earn a real return again in government bonds, it will exit Bitcoin / crypto," he wrote.
"The whole point of this exercise is to preserve / grow purchasing power against energy. If that can be done in the most liquid asset, government bonds, then liquidity will take the easy option."
Should such an event occur in the future, Bitcoin would be more dependent on its technological premise, something which Hayes believes will be decidedly underwhelming without the big money on board.
"The amount of remaining technological value is beyond my skills to estimate," he warned.
"However, it is much lower than the current fiat price of Bitcoin today."Arthur Hayes' anti-inflation options chart. Source: David Venturi/ Twitter
To counteract the risk, investors should take advantage of both cryptocurrency's unparalleled potential and future rate volatility.