Michael Saylor’s MSTR stock is down 30% since Nasdaq-100 listing (QQQ) and 45% from peak.

In the past, it was inevitable.

Shares of MicroStrategy (MSTR) fell more than 8% and held just over $300 on Monday, about 30% since announcing its inclusion in the Nasdaq-100 directly, and about 50% from their record high in late November.

The signs were at least on a big short-term top in the once little-known enterprise software company that has turned into the ubiquitous Bitcoin development company MicroStrategy.

The first of these signals was the rising stock price — at a high of $543 in late November, MSTR has risen nearly eightfold in 2024 and more than 50% since the company began buying Bitcoin (BTC) in August 2020.

There was also founder and CEO Michael Saylor — who has never been shy about touting his company’s prospects and evangelizing for Bitcoin — and who late this year somehow became more ubiquitous in financial news, podcasts, and social media.

And not just the constant appearances, but the subtle changes in Saylor’s attitude toward what might be described by American sports fans as “lifting the football” after a relegation. And he was among them Continuous promotion From the KPI that MicroStrategy invented for “Bitcoin Return,” which references made-up late-1990s dot-com bubble metrics like “page views.” His company, flush with cash from stock sales and convertible debt, Saylor – for unknown reasons – lost money late in the year as well I got into the habit Exciting announcements of new large purchases of Bitcoin on Sunday ahead of the formal regulatory filing on Monday morning.

And then there was the rise of imitators. Despite years of clear success of Saylor’s Treasury strategy for Bitcoin, there has been a distinct lack of other publicly traded companies adopting the same. Yes, a few of them — even big companies like Elon Musk’s Tesla and Jack Dorsey’s Square — have dipped their toes into Bitcoin. However, no other company has been willing to not only adopt Bitcoin as their main treasury asset, but also take advantage of markets willing to raise additional capital to accumulate tokens.

However, that has changed in a big way this year, with small medical device company Semler Scientific, Japanese hotel operator Metaplanet, and a number of Bitcoin miners among those embracing Saylor’s vision — each of them gaining. Social media desirability From Saylor with every capital increase and Bitcoin purchase announcement.

If something can’t go on forever, it will stop

George Soros was not content with being perhaps the greatest trader of all time and amassing several billion dollars, he wanted to be known as a great thinker. It is no coincidence that his remarkable work in trading — Reflexivity theory – It looks suspiciously similar to a famous theory by a fellow named Einstein.

Soros explained that investor perception and its influence on prices is a constant two-way street. This way, perception (which is often wrong, because humans are fallible) can not only influence prices, but literally create its own reality, i.e. 1) investors believe the stock will rise because earnings are about to get a big boost, 2) The stock price rises, 3) A rising stock price allows management to raise capital more cheaply than anything else, 4) This improves profits, 5) The stock price rises, 6) The bulls pat themselves on the back as they shine and win Converts,…and so on.

Strip away a lot of Soros’ philosophy, and this is also known as the virtuous circle, which MicroStrategy certainly finds itself in in 2024. Part of Soros’ trading genius was to recognize these circles when they were happening and jump on them — in size. Another part of his genius was detecting when circles were about to break and exiting them or even betting against them.

The late economist Herb Stein, who at the time was talking about government/trade budget deficits, said: “If something cannot go on forever, it will stop.” It turns out that Stein’s Law was equally applicable to MicroStrategy stock.

Scoreboard: Still showing noticeable gains

Trading at around $430 following the December 14 announcement of its upcoming Nasdaq 100 listing, MicroStrategy now sells for just over $300, a roughly 30% drop in just two weeks.

Looking back, there appear to be cracks in the MicroStrategy bubble three weeks ago. The stock peaked at around $543 on November 21. Although Bitcoin continued to rally through late November and early December to a final high above $108,000, the MSTR lost ground – what technicians might call a worrying negative skew. At the current price of $300, MicroStrategy is currently experiencing a peak-to-trough decline of 45% in about five weeks.

MSTR stock continues to perform admirably under anything but this very small time frame. It’s still up more than 400% year-to-date and nearly 20x since Saylor started buying Bitcoin in August 2020.

While the bears might say that a decline is still a long way off, the bulls will certainly point out that over the MSTR period since August 2020, the stock has suffered a number of similar scary declines in the short to medium term and has always been trending higher.

What will Soros say? He will probably mention that his theory of reversibility taught that prices could go higher (up and down) than most people would expect.