The stock price of MicroStrategy (MSTR) rose over 20% on March 4 in the early hours of trading in the United States. By midday, it still maintained a gain of over 15%. MircoStrategy is a strong investor in Bitcoin, so the price of Bitcoin directly affects the stock price.
After closing at $1,079 on March 3, MSTR opened at $1,200 on March 4 and reached a high of $1,339 during the day.
According to Mechanism Capital co-founder Andrew Kang, around 20% of MicroStrategy’s public shares, valued at around $3 billion, are locked in short positions.
In other words, investors are looking to take advantage of the compounding interest from continuous cash flow.
Kang warned that miscalculations could lead to a “discrepancy bubble turning into a major squeeze,” as seen in the short squeeze of GameStop (GME) in January 2021. On January 29, 2021, GME’s price rose 1,500% in two weeks. After reaching a high of $81, GME dropped to $13 within a month.
