History repeating itself? Similar to the early-year frenzy of SMCI, MSTR also experienced a significant one-day adjustment after a short-term surge
The Frenzied Trading of SMCI $Super Micro Computer(SMCI.US)
Time Period: January 19, 2024 – February 16, 2024
SMCI benefited from the AI frenzy at the beginning of the year, when the market believed that Super Micro Computer's liquid cooling system was a necessary condition for next-generation artificial intelligence computing hardware solutions. The company was described as the "Switzerland of AI," benefiting from the overall growth of AI rather than specific customer growth. At that time, Bloomberg data showed that market expectations for Super Micro Computer's net profit in 2024 had generally soared by 66% over the past six months, with overall revenue expected to more than double in 2024. SMCI's revenue growth for the fiscal year 2023 was nearly 40%, surpassing Nvidia's growth rate during the same period.
The Frenzied Trading of MSTR $Strategy(MSTR.US)
Time Period: November 6, 2024 – November 22, 2024
MSTR's recent surge was mainly driven by Trump's strong support for cryptocurrencies, which boosted the Bitcoin market. Reports indicated a "symbiotic relationship" between MSTR and Bitcoin: by issuing stocks and bonds to finance Bitcoin purchases, MSTR pushed Bitcoin prices higher, and the rise in Bitcoin further propelled MSTR's stock price.
On November 20, Cullen Roche, founder of the fund company Discipline Funds, commented that MSTR might be the world's most successful "investment bank," describing it as either the greatest innovation in financial history or the most reckless endeavor. In Roche's view, MSTR's aggressive Bitcoin buying strategy has indeed been very successful, but it somewhat resembles a Ponzi scheme. If it were him, he would "definitely want to pack up and leave, declare victory, and then go buy... anything I want."
Additionally, yesterday, Citron Research announced that it was shorting MSTR, stating that the company had effectively turned into a Bitcoin investment fund. While they have great respect for MSTR CEO Saylor, he must also recognize that MSTR is overheated.
It is worth mentioning that renowned investor Guo Yu @Guo Yu mentioned: Yesterday at around 3:45 PM (Eastern Time), a large position sold call options worth $149 million, approximately 10,000 contracts of the MSTR 300 call expiring on December 27, indicating that the short seller believes MSTR's stock price should be below $300 after Christmas.
From the comparison of the candlestick charts of MSTR and SMCI, although SMCI experienced a significant pullback after a continuous rise, its stock price made a second attempt to rally in a very short time. Do you think MSTR will repeat history?
Educational Content
As the trading volume of MSTR surges, various issuers are also seeing a rush of investors for long and short ETFs related to MSTR. Let's take a closer look:
Long Direction
MSTU $T-REX 2X Long MSTR Daily Target ETF(MSTU.US): A 2x leveraged long MSTR product launched by REX Shares, designed for bullish investors, aiming to provide 200% of MSTR's daily performance.
MSTX $Daily Target 2X Long MSTR ETF(MSTX.US) : Another 2x leveraged long ETF launched by REX Shares, similar to MSTU, focusing on amplifying daily returns.
MSTY $YieldMax MSTR Option Income Strategy ETF(MSTY.US) : An actively managed ETF with an options income strategy, providing periodic dividend returns to investors through covered call options, but due to the potential exercise of sold call options, the ETF's gains may not match those of MSTR's underlying stock when MSTR's stock price rises Short Selling Direction
MSTZ $T-REX 2X Inverse MSTR Daily Target ETF(MSTZ.US) : A double short MSTR ETF from REX Shares, designed for bearish investors, providing -200% returns on MSTR's daily performance.
SMST $Defiance Daily Target 2X Short MSTR ETF(SMST.US) : An ETF that offers similar inverse shorting capabilities as MSTZ, helping investors capture opportunities from MicroStrategy's stock price decline.
Risk Warning:
Blockchain concept stocks are highly volatile with BTC movements, please be aware of volatility risks; options are high-risk investment products, and investment should be approached with caution; leveraged and inverse ETFs are complex investment products, and it is crucial to fully understand the operation of these products and the associated risks before making investment decisions
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