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This Hedge Fund goes long on Bitcoin, short on MicroStrategy due to valuation doubts

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This Hedge Fund goes long on Bitcoin

Kerrisdale Capital is allocating funds to Bitcoin investments while simultaneously taking a position against MicroStrategy shares.

The rationale for this move is the belief that the market value of MicroStrategy’s stock far surpasses its actual worth, which is mostly derived from its Bitcoin holdings.

The hedge fund contends that MicroStrategy’s software business has become inconsequential in comparison to its Bitcoin holdings, making a little contribution to the company’s total value.

Kerrisdale also examined MicroStrategy’s financial tactics, including leveraging debt and issuing more shares, which resulted in a rise in its Bitcoin holdings but a decrease in its Bitcoin per share value. Kerrisdale forecasts a probable 50% decline in the stock of MicroStrategy if the premium on its shares returns to more customary levels.

The financial community exhibited a range of responses, with some individuals agreeing with Kerrisdale’s reasoning while others cautioned against the market’s inherent instability.

Kerrisdale Capital’s action underscores the disparity in value between corporate equities and their corresponding cryptocurrency holdings, prompting discussion among investors and experts.

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James Wilson is a crypto writer and researcher with over 5 years of experience in the industry. He is a graduate of the University of California, Berkeley, where he studied computer science and economics. After graduating, he worked as a software engineer at a major tech company before transitioning to a career in crypto.