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On Wednesday, Bernstein analysts provided insights into the recent Bitcoin price drop, viewing it as a potential investment opportunity. Bitcoin has experienced a 15% decline over the past 30 days, breaking below the $90,000 support level. The cryptocurrency lost over 9% of its value in just two days, falling from the mid $90K range and breaching a level it had rebounded from multiple times since the surge following the U.S. presidential election. This volatility is reflected in Bitcoin-proxy stocks like MicroStrategy (MSTR), which has seen a 21.39% decline in the past week, though maintaining a remarkable 214.52% return over the past year, according to InvestingPro data.
The drop is attributed to various factors, including a $1.5 billion hack of Bybit, a top offshore exchange, and skepticism around meme coins after controversy surrounding the Libra token by the Argentine President. Bernstein analysts believe the downturn is in line with broader equity risk sentiment, which is affected by macroeconomic concerns such as persistent higher interest rates and fears of deflationary government policies. The high-risk nature of crypto investments is evidenced by MSTR’s beta of 3.26, indicating significantly higher volatility than the broader market.
Despite the recent correction, Bernstein maintains a positive long-term outlook on Bitcoin, likening it to a "digital gold" asset class with growing institutional and sovereign demand. They assert that the fundamental structure of the current Bitcoin cycle remains intact. The cycle, which began in late 2023, is expected to reach a high near $200,000 within the next 12 months. InvestingPro analysis shows that MSTR’s RSI currently indicates oversold territory, potentially presenting an opportunity for investors looking to gain exposure to Bitcoin’s potential upside. Get access to 13 additional ProTips and comprehensive analysis with an InvestingPro subscription.
Analysts suggest that the break below $90,000 could lead the market to test support around the mid $70K range, the all-time high breakout point after the U.S. election results. However, they anticipate that Bitcoin will continue to mirror equity risk-on sentiment in the near term, with potential deviations if bullish announcements emerge from the Whitehouse Crypto task force regarding the U.S. Bitcoin reserve.
In terms of entry points for investors, Bernstein suggests that price levels below $80,000, should the market sentiment continue to weaken, could offer a compelling risk-reward scenario for those positioning for the next 12-18 months and aiming for new cycle highs. They emphasize that despite the current risk-off sentiment, they see no reason to alter their bullish view of Bitcoin’s market structure, expecting continued acceleration of institutional and corporate treasury inflows into the cycle.
In other recent news, MicroStrategy Incorporated has made headlines with a significant Bitcoin acquisition. The company disclosed in an SEC filing that it purchased an additional 20,356 bitcoins, spending approximately $1.99 billion in cash. This acquisition was funded through a convertible notes offering, which raised $2 billion, with an option for an additional $300 million. As of February 23, 2025, MicroStrategy’s total Bitcoin holdings stand at approximately 499,096 bitcoins, acquired at an average price of $66,357 per bitcoin. The company has also announced plans to redeem its 0.0% Convertible Senior Notes due 2027, with conversion requests amounting to approximately $857.4 million in principal. Meanwhile, the California State Teachers Retirement System (CalSTRS) nearly doubled its holdings in MicroStrategy stock during the fourth quarter of 2024, reflecting a significant increase in value. Despite a net loss reported for the fourth quarter, MicroStrategy continues to focus on its cryptocurrency strategy. The company’s ongoing financial maneuvers highlight its commitment to integrating Bitcoin into its broader corporate strategy.
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