The Defiance Daily Target 2X Long MSTR ETF (MSTX), which tracks MicroStrategy Inc (NASDAQ:MSTR) shares, plummeted by a staggering 15.24% on November 1, 2024, amid growing concerns over MicroStrategy's heavy reliance on Bitcoin and its ambitious capital raising plans.
MicroStrategy, known for its aggressive Bitcoin acquisition strategy, currently holds a massive 252,220 Bitcoins valued at $18 billion as part of its "Bitcoin Treasury" strategy. However, the company's plans to raise an additional $42 billion over the next three years to fund further Bitcoin acquisitions have raised eyebrows among investors, fueling fears of potential dilution for existing shareholders.
Furthermore, MicroStrategy's excessive exposure to Bitcoin exposes the company to significant market risk and volatility, which could potentially impact its financial stability. Compounding these concerns is the recent decline in the company's software business revenue and its ongoing transition from on-premise to cloud-based solutions, raising questions about the performance of its core business.
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