Disclaimer: The analyst who wrote this piece owns shares of MicroStrategy (MSTR)
It’s been a tough month for MicroStrategy (MSTR), the software developer turned bitcoin (BTC) accumulator. Its stock fell almost 50% since Novemberwhen it joined the Nasdaq 100 index and climbed to a 600% gain since the beginning of the year.
This still leaves the Tysons Corner, Virginia-based company with a whopping 342% ahead of 2024, the biggest return on assets with the highest profile linked to crypto in traditional finance (TradFi).
It’s been a volatile year, full of geopolitical and technological developments to improve financial markets. The ongoing wars in eastern Europe and the Middle East, elections around the world, the unwinding of the yen brought trade in August and the growth of artificial intelligence (AI) left their mark.
MicroStrategy’s gain was nearly double that of Nvidia ( NVDA ), the chipmaker whose production of integrated circuits needed for AI applications has driven a 185% return, the best of the so-called great seven tech stocks . The next best, Meta Platforms (META), was 71%.
Bitcoin itself is up 100% in a year plus April’s reward is half and multiple record highs. The demand for the largest cryptocurrency is driven by January approval of spot exchange-traded funds (ETFs) in the US Bitcoin outperformed its two biggest competitors, ether (ETH), up 42%, and Solana (SOL), up 79%.
The ETF’s iShares Bitcoin Trust (IBIT) also returned more than 100% and became the fastest ETF in history to reach $50 billion in assets.
Bitcoin mining companies, as a whole, have failed. The Valkyrie Bitcoin Miners ETF (WGMI), a proxy for mining stocks, rose just under 30%. That’s despite the need for miners’ computing capabilities and power supply agreements from artificial intelligence and high-performance computing (HPC) companies. However, individual companies benefited, in particular, Bitdeer (BTDR), which added 151%, and WULF (WULF), which gained 131%.
However, miners beat the broader equities market. The tech-heavy Nasdaq 100 Index (NDX) added 28% while the S&P 500 Index (SPX) rose 25%. The S&P 500 also followed behind gold’s 27% rise. The precious commodity is now leading the equity gauge three in the last five years.
Concerns about US inflation and the country’s budget deficit added to geopolitical uncertainties to prompt a massive rise in US treasury yields, which moved in the opposite direction to prices.
The yield on the 10-Year Treasury has added 15% to 4.5% over the year, and has surprisingly gained a full 100 basis points since the Federal Reserve began cutting interest rates in September.
The iShares 20+ Year Treasury Bond ETF (TLT), which tracks bond prices, is down 10% this year and has lost 40% over the past five years.
The dollar, on the other hand, showed strength. The DXY Index (DXY), a measure of the greenback against a basket of currencies of the US’s biggest trading partners, rose to its highest since September 2022.
West Texas Intermediate (USOIL), the benchmark US oil price, ended the year little changed, up less than 1% to around $71 a barrel. But it’s been a bumpy ride, with the price rising to nearly $90 at some point over the past 12 months.
As we enter the new year, all eyes are on debt ceiling discussionthe policies of President-elect Donald Trump and whether the US can continue its remarkable growth story.
