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Buying Bitcoin Couldn’t Save MicroStrategy Shares From 50% Crash

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Bitcoin price has had one of its largest corrections since the bull market began, and has since struggled to reclaim $50,000. But the scenario is nowhere near as bad for the cryptocurrency as it is for one of its biggest supporters.

Although the company’s share price had benefitted initially from buying BTC, it wasn’t enough to fend off profit-taking and an eventual now 58% correction in MicroStrategy. Here’s why this could be happening, and what it could also say about the current crypto market trend.

MicroStrategy Shares Fall 50% After Buying More And More BTC

One of the biggest catalysts kickstarting Bitcoin’s most recent bull run, was undeniably when MicroStrategy first revealed it had purchased a sum of BTC to add to its corporate treasure reserves. From then on, others have followed suit, and CEO Michael Saylor has doubled, and tripled down on his initial purchase.

The price per BTC has risen accordingly, from just above $10,000 to nearly $50,000 currently. Along with the price of Bitcoin, MicroStrategy shares have risen almost as sharply as investors used the company to gain exposure to the cryptocurrency, and also bet big on the reemerging brand as well.

RELATED READING | ONE YEAR LATER: BITCOIN EMERGES AS “THE STIMULUS ASSET”

But as Bitcoin started correcting amidst an uneasy macro environment, MicroStrategy stock shares have fallen by 58%. The chart appears to show a parabola that’s now broken, suggesting that the correction isn’t nearly finished.

microstrategy bitcoin btc

MicroStrategy has nosedived by more than 50% since an early Feb peak | MSTR on TradingView.com

 

Could Bitcoin Fall Fate To The Saylor Effect?

As for why MicroStrategy is taking such a beating, it could be due to stock market jitters, that have most left the crypto market unscathed. However, it could be a sign of what’s to come instead.

The orange line superimposed behind the MicroStrategy chart above, is the BTCUSD price chart from Coinbase. Not every peak and trough has followed perfectly, but the path is close enough to suggest there could be some correlation between the two.

If there is a correlation, either Bitcoin is about to correct another 20 to 25%, or there’s something else afoot. As for what other reasons could exist for the divergence, it could come down to more ways to become exposed to BTC now existing in traditional markets than there was a year ago.

RELATED READING | HOW LASER EYES COULD HAVE BITCOIN INVESTORS SEEING RED

Another alternative is that CEO Michael Saylor’s BTC buying spree could be starting to be viewed as irrational, and former believers are now jumping ship. Saylor, who now adorns “laser eyes” on Twitter is one of the cryptocurrency’s biggest supporters, but doesn’t always place bets at the right time – even though the technology itself he bets on is a sure thing.

Saylor was once deemed the biggest loser of the dot com bubble, but ultimately the internet became widely adopted. Few argue that Bitcoin will eventually do the same, but could this scenario that hit Saylor in the past be playing out once again?

Featured image from Deposit Photos, Charts from TradingView.com



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Turkish crypto exchange halts trading amid reports of police raid

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Major Turkish cryptocurrency exchange Thodex has abruptly halted trading and withdrawals amid reports of police raids, Cointelegraph Turkey reported on Thursday.

Thodex posted an official announcement on Twitter on Thursday, informing users that it has halted transactions for a period of four to five days. According to a statement, the platform stopped trading and withdrawals due to a purported partnership with “world-renowned banks and funding companies” to improve its services.

Thodex said that its clients should not be worried about their investments, stating that “users will be informed regularly” during the suspension period. The exchange had previously announced a six-hour-long maintenance break on Tuesday.

The abrupt suspension of trading and withdrawals has concerned the crypto community, as the exchange has gone radio silent since announcing the interruption.

Local publications speculated that the suspension could be part of an exit scam amid reports that the company’s founder, Faruk Fatih Özer, has fled to Thailand with $2 billion worth of crypto. The founder allegedly left Istanbul Airport on Tuesday, while local authorities have launched a criminal investigation against the firm and raided Thodex’s offices.

Thodex did not respond to Cointelegraph’s requests for comment.

The news comes amid a new wave of concern over the Turkish government’s stance on cryptocurrency regulation. The country’s central bank officially announced a ban on crypto payments effective as of April 30. 

Additional reporting by Erhan Kahraman and Ayse Karaman.