MSTR outperformed BTC and diverged.

• It is approaching its ATH, up 68% since September.

MicroStrategy [MSTR] reached a six-month high of $198, just below its $200 ATH. The latest rally coincided with a mysterious message from founder Michael Syalor.

Saylor wore a gladiator  outfit,  Bitcoin [BTC]  necklace, and sword in her latest X (formerly Twitter) post  .

This could be interpreted as a willingness to publicly defend and advocate for BTC in an environment of financial instability and fiat-driven inflation.

Saylor is perhaps the most notable BTC bull, who is extremely bullish on the asset. He believes that BTC is the most superior asset and store of value in human history, given its fixed supply and censorship-resistant properties.

This stance of his guided the BTC treasury strategy he pioneered with MicroStrategy.

The Bitcoin-focused software provider currently has around $16 billion worth of BTC (252,000 coins), with more than $1.5 billion of that purchased in Q3 2024.

$16 billion BTC holdings trigger MSTR rally 

MicroStrategy’s MSTR rally was attributed to the firm’s massive BTC accumulation, CryptoQuant   noted  .

“Since MicroStrategy began buying $BTC on August 11, 2020, its shares have increased by 1,208%, while Bitcoin itself has increased by 445%.”

However, MSTR’s massive BTC holdings, the majority of which are through debt (convertible notes), have made it strongly correlated with the digital asset.

However, the recent rise of the stock indicates a complete break from BTC .

Since September, MSTR has risen 68%, from $114 to almost $200. On the other hand, BTC is up 18% in the same period and was struggling with critical support at press time.

This rise even surprised BTC critic Peter Schiff   .

“What’s going on with $MSTR? It’s up 18% in the last 3 days, while #Bitcoin is up only 1%.”

On a YTD basis, MSTR is up 177%, while BTC is up 38%. This underscores that MSTR investors are making more profit than their BTC counterparts.

This also meant that MSTR was trading at a premium to BTC .

However, as of press time, MSTR’s RSI signaled an overbought signal, which could complicate the short-term outlook, especially ahead of earnings season.

Some market observers wondered why investors were turning to MSTR to indirectly hold BTC rather than directly purchase the asset. However, Bitwise’s Jeff Park   saw MSTR as a simultaneous long and short global carry trade.

“$MSTR is both long and short global carry at the same time. Borrowing at low rates to invest in Bitcoin is long global carry. Bitcoin itself is short global carry.”

For perspective, a carry trade involves borrowing a low-interest currency to invest in a higher-yielding asset. MicroStrategy’s BTC holdings were acquired through debt.

However, BTC is also considered a risk-off asset and a hedge against inflation tied to fiat currencies. Therefore, MicroStrategy’s move can be thought of as a bet against global inflation – a short global move.