Kerrisdale long Bitcoin, short MicroStrategy given ‘unjustifiable premium’

In a recently published report, Kerrisdale Capital said it was long Bitcoin and short shares of MicroStrategy, “a proxy for bitcoin which trades at an unjustifiable premium to the digital asset that drives its value.” The report notes “shares of MicroStrategy have soared amid a recent rise in the price of bitcoin but, as is often the case with crypto, things have gotten carried away. The bitcoin price currently implied by MicroStrategy’s stock is now over $177k, i.e., two and a half times the spot price of bitcoin. The days when MicroStrategy shares represented a rare, unique way to gain access to bitcoin are long over.” “None of the reasons commonly provided for MicroStrategy’s relative attractiveness justify paying well over double for the same coin. MicroStrategy’s trading history and basic common sense suggests the current inflated premium will contract, much as it has on prior occasions, providing a compelling opportunity for a pair trade,” Kerrisdale adds.