What Happened?
Shares of bitcoin development company Strategy (NASDAQ: MSTR) jumped 1.8% in the morning session after the price of Bitcoin surged, lifting other cryptocurrency-exposed stocks. The software company, which holds a large amount of Bitcoin, saw its shares rise in line with the world's largest cryptocurrency. Bitcoin's price jumped to nearly $119,400, marking a significant gain.
After the initial pop the shares cooled down to $346.11, up 2.3% from previous close.
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What Is The Market Telling Us
Strategy’s shares are extremely volatile and have had 73 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 20 hours ago when the stock gained 4.5% on the news that the U.S. Treasury Department and IRS indicated the company may avoid the 15% U.S. corporate alternative minimum tax on its substantial unrealized cryptocurrency gains. The interim rule clarifies that companies can exclude unrealized gains and losses on digital assets, such as Bitcoin, when calculating their tax liability. This development is particularly significant for Strategy, the world's largest corporate Bitcoin holder, as it has previously flagged the risk of a multi-billion-dollar tax bill on its more than $27 billion in unrealized profits. The favorable guidance removes this major financial uncertainty for the company. The stock's rise also occurred as the price of Bitcoin surged, lifting other cryptocurrency-linked equities.
Strategy is up 15.4% since the beginning of the year, but at $346.11 per share, it is still trading 27% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of Strategy’s shares 5 years ago would now be looking at an investment worth $23,632.
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