Can MicroStrategy stock shoot to $700 amid Bitcoin rally?

In the short term, the approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) created a massive downturn for the world’s foremost cryptocurrency and for the crypto market as a whole, as it wiped $100 billion in less than a week.

Additionally, the shares of MicroStrategy (NASDAQ: MSTR), a company that tied its fate to that of BTC four years ago, also saw their price gutted as they fell 20% in the first 48 hours after the SEC officially unveiled its decision.

Early February, however, brought about a major change in trend. After approximately a month of indecision, Bitcoin broke out on Wednesday, February 7, and, by press time on February 9, rapidly rose from almost exactly $43,000 to $46,629.

Indeed, the surge was significant enough that BTC’s year-to-date (YTD) chart turned positive, and the cryptocurrency is up 5.41% since January 1, 9.38% in the last week of trading, and 4.33% in the last 24 hours.

MicroStrategy rides the Bitcoin wave

As has commonly been the case since the company started buying Bitcoin, MSTR stock shot up during the current rally. In fact, after seeing a massive decline since January 1, the company rose as much as 18.21% in the last week.

The vast majority of this rally took place during the last full trading day – February 8 – as the company’s shares closed 15.71% in the green. Finally, Friday, February 9, is shaping up to be another exceptionally strong session as Microstrategy is up another 4.63% in the premarket.

Can MSTR surge to $700

Having reached the average analyst price target of $615 retrieved from TipRanks on February 9 already in Friday’s pre-market and being very close to the current high estimate of $650, the question of whether MSTR stock can shoot even higher – to $700 and beyond – arises.

While such a target is high, especially given the company’s longer-term performance in the stock market, the fact the firm’s share price rose $79.80 in the last 24 hours alone – $106.99 if the extended session is taken into account – lends it significant credibility.

Still, such a stellar surge remains uncertain and optimistic. For starters, such a significant surge tends to quickly lead to a correction as investors start taking profits quickly. 

Additionally, MicroStrategy’s performance is deeply tied to Bitcoin’s price movements, and should its own rally peter out, it is unlikely that Michael Saylor’s firm could sustain its own.

Finally, the approval of spot BTC ETFs weakened MicroStrategy’s position as the main way for investors to get exposure to the cryptocurrency without directly owning it meaning that its already-imperfect correlation is likely to only become looser. In turn, this means that even a sustained Bitcoin surge needn’t necessarily lead to one for the firm.

Buy stocks now with eToro – trusted and advanced investment platform

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.