Analyst Predicts Overvaluation of Bitcoin's Top Public Holder's Stock by 26%

• MicroStrategy Shares Overvalued, Suggests 10x Research
• MicroStrategy Shares and BTC's Correlation
• Relationship Between Crypto Stocks and Bitcoin
• Overvaluation and Recommendations by 10x Research

MicroStrategy Shares Overvalued, Suggests 10x Research

The astonishing 343% surge in MicroStrategy's shares this year has left investors uncertain about the future. Suggestions from 10x Research, under the leadership of Markus Thielen who accurately forecasted BTC's rally this year, may shed some light on this situation. According to the latest research note from 10x, MSTR's shares seem to be overvalued by 26%. This inference is drawn from their regression model that investigates the correlation between MSTR, the dependent variable, and BTC's spot price, an independent variable.

MicroStrategy Shares and BTC's Correlation

10x Research explains that the regression model reveals that MicroStrategy is overvalued by 26% and could potentially see a 20% downside based on the current Bitcoin$42,260 -0.64% prices, pointing it might be time for investors to lock in profits. MSTR, a significant bitcoin holder, has seen its shares increase more than fourfold this year, reaching a peak of $673 on Wednesday. This growth has positioned it among the best-performing crypto-related stocks of 2023. The Nasdaq-listed company currently holds 189,150 BTC, having begun accumulation three years ago as a reserve asset. Bitcoin, the most prominent cryptocurrency by market value, has seen a 160% rise this year, with a 60% surge this quarter alone.

Relationship Between Crypto Stocks and Bitcoin

The performance of crypto-related stocks, such as MSTR and Coinbase, in comparison to bitcoin, is often considered an indicator of institutional interest in digital assets. These public market instruments provide an opportunity for market participants to gain exposure to digital assets without owning them directly. The chart highlights an upward sloping line, showing a positive linear relationship between MSTR and BTC. This positive correlation means as the BTC price increases, the market value of MSTR also rises. An R² (R-squared or the coefficient of determination) of 0.8232 implies that 80% of the variation in MSTR can be explained by BTC's price.

Overvaluation and Recommendations by 10x Research

Based on the analysis, MSTR, at Thursday's closing price of $673, is overvalued by 20% considering the current market rate of bitcoin around $43,000. 10x Research opines that several crypto-related stocks are trading at near fair value based on bitcoin's price. They suggest reaping profits and reducing long positions. Cryptocurrency stocks such as HIVE, HUT, and GALAXY still possess some value, but the major profits have already been made in these stocks, according to 10x.

Edited by Jonathan Stoker