MSTR Stock: Why MicroStrategy Is Tumbling Again Today

Timing is everything, as investors in MicroStrategy (NASDAQ:MSTR) are discovering this morning after the company’s $10 million Bitcoin (CCC:BTC-USD) purchase yesterday is worth 20% less this morning. MSTR stock is down 14% in pre-market trading.

a digital representation of a bitcoin surrounded by several other altcoins forming a circular shape

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For those unfamiliar with MicroStrategy, it is a business intelligence company, but as recently as Feb. 8, it also held more than $3 billion in Bitcoin on its balance sheet. Back in November, Citron Research named it the best way to play BTC-USD. Since then, MSTR stock was up more than 180%.

MicroStrategy uses Bitcoin has its primary treasury asset. The purchase disclosed on Tuesday includes 229 bitcoins bought at an average price of $43,663 a piece. Those brought its holdings to more than 92,000 bitcoins. However, crypto carnage has hit this morning, driving BTC-USD below $40,000 for the first time since early February.

MSTR Stock: Regulatory Scrutiny Prompts BTC Selloff

The selloff followed moves by regulators in Beijing and Washington on cryptocurrencies. Several of China’s banking and finance watchdogs told that country’s financial institutions and payment transfer operators to halt their participation in any crypto-related transactions. The ban goes for crypto-related services provided to clients, as well.

“Prices of cryptocurrency have skyrocketed and plummeted recently, and speculative trading has bounced back. This seriously harms the safety of people’s property and disturbs normal economic and financial orders,” said a statement from regulators supervised by the People’s Bank of China and the China Insurance and Banking Commission.

Meanwhile, later today, regulators in Washington will announced a review of all of the U.S. Office of the Comptroller of the Currency’s (OCC) pending matters, interpretative letters and guidance, including issues around digital assets and cryptocurrencies.

Michael Hsu, the new acting comptroller, will appear before the House Financial Services Committee in a hearing slated to include all of Washington’s federal bank regulators. His prepared remarks noted that his predecessor’s digital currency “initiatives were not done in full coordination with all stakeholders. Nor do they appear to have been part of a broader strategy related to the regulatory perimeter. I believe addressing both of these tasks should be a priority.”

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor.


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