Shares of MicroStrategy (MSTR 0.10%) jumped on Monday, with the stock up about 5% as of 2 p.m. ET. And it was up for multiple reasons. On Friday (after the market closed), Nasdaq announced that the stock was going to be included in the Nasdaq-100 index — a list of roughly 100 non-financial companies. It’s an unbelievable development for the company considering its market capitalization was less than $1 billion just five years ago, which was far too small for Nasdaq-100 consideration.
The incredible rise of MicroStrategy stock has been due to its aggressive investments in the world’s largest cryptocurrency: Bitcoin. According to a Dec. 16 financial filing, the company just purchased 15,350 Bitcoins during the past week alone, bringing its total holdings to about 439,000 Bitcoins.
That’s a big deal considering the price of Bitcoin is up about 1,500% during the past five years. In fact, it even hit a new all-time high today at over $107,000 per Bitcoin. And as Bitcoin’s price has gone up, MicroStrategy’s holdings have consequently increased in value, making it one of the most valuable companies in the world and earning it a spot in the Nasdaq-100.
MicroStrategy’s success also inspired other companies to use the same playbook. Mara Holdings (MARA 8.29%) and Riot Platforms (RIOT 8.01%) are two of the largest Bitcoin mining companies in the world. But both are now aggressively buying Bitcoin as well, following in MicroStrategy’s footsteps. With Bitcoin up today, both Mara and Riot were up about 10% as of 2 p.m. ET.
Right now, everything just keeps going up
As of Dec. 9, Mara held 40,435 Bitcoins. More than 20,000 of these have been mined with the company’s normal business operations. But in recent months, the company has been buying even more Bitcoin on the open market.
The same is true for Riot. In a press release today, management said that it closed on a previously announced debt offering, raising $579 million after expenses. The company intends to use all of this money to buy Bitcoin, which should allow it to buy almost 5,500 Bitcoins at the current price. These will go with the 16,728 Bitcoins it already owned as of Dec. 13.
The relationship between the price of Bitcoin and the stock prices of MicroStrategy, Mara, and Riot is becoming somewhat symbiotic. When Bitcoin goes up, the value of these three stocks also goes up because of how much Bitcoin each company holds. But as these companies become more valuable, they’re able to access more funds to buy more Bitcoin, which further drives up the price.
Will Bitcoin continue its historic climb?
As long as Bitcoin keeps rising, shares of MicroStrategy, Mara, and Riot should also continue to do well. And historically speaking, there’s reason to believe that Bitcoin is in for a good time in 2025.
I don’t mean to say that Bitcoin is without risk. In the past, things such as failed cryptocurrency exchanges, excessive leverage, and fears over regulation have dropped the price of Bitcoin lower. Things seem to be warming on the regulatory front but these risks are still ongoing issues.
That said, Bitcoin has historically performed very well the year before its halving event, the year of its halving event, and the following year. Without explaining the ins and outs of it all, the halving event disrupts the stability of supply and demand in the market, which has usually driven the price higher.
This year was a halving event year for Bitcoin. Right on schedule, the price went up in 2023 and 2024. And if history repeats itself again, the price could continue rising in 2025.
To reiterate, a healthy dose of skepticism is always a good thing in investing. But if Bitcoin rises in 2025, it should be good for MicroStrategy, Mara, and Riot, generally speaking.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
