MicroStrategy Stock Fuels 3-Year Convertible Bond Peak As Bitcoin Hits $93k

MicroStrategy stock has surged this month, propelling the U.S. convertible bond market to its highest returns in three years. The company’s February 2027 convertible bonds climbed 60 cents on the dollar in November, marking their best monthly performance since issuance in 2021.

This growth is driven by Bitcoin’s recent rally, with the cryptocurrency reaching a historic high of over $93,000 on Wednesday.

MicroStrategy Stock Fuels 3-Year Convertible Bond Peak

MicroStrategy’s stock is leading the charge in the U.S. convertible bond market, which has reached a total of $310 billion. A Bloomberg index tracking 500 US convertible bonds is set for its best month this year, with MicroStrategy contributing to almost 25% of the increase. The company’s bond market has also been under focus due to its February 2027 notes which rose in value in November.

MicroStrategy’s tactical emphasis on Bitcoin has added value to its convertible bonds. The company has more than $24 billion worth of Bitcoin and its bondholders have been enjoying the increasing value of the cryptocurrency.

Convertible bonds, which let investors get a constant yield while having the possibility to exchange the bonds for shares, have also been attractive to MicroStrategy given the growth of its stock in tandem with Bitcoin.

MicroStrategy Expands Bitcoin Holdings Amid Price Surge

Some of the recent actions undertaken by the company are acquiring about 27,200 Bitcoins at an approximate value of $2.03 billion. This acquisition, which was made between October 31 and November 10, is the company’s biggest in the past two years. 

As of now, with more invested in Bitcoin and the asset valuing more than ever, MicroStrategy’s holdings are now worth nearly $24 billion.

MicroStrategy’s co-founder and chairman Michael Saylor began the company’s Bitcoin acquisition back in 2020 with the aim of protecting against inflation. At first, the firm bought Bitcoin using cash but has since funded its purchases through selling stock and issuing convertible debt. This has enabled MicroStrategy to get the most out of its Bitcoin buys, strengthens the company’s status as one of the biggest corporate owners of the cryptocurrency.

Bitcoin Price Rally Boosts Market Standing

Bitcoin’s recent surge has had a direct impact on MicroStrategy stock, which is up 46% this month alone. The software company’s stock has risen over 2,500% since August 2020, far outpacing traditional tech stocks. Bitcoin’s latest peak, driven by increasing U.S. investor interest and expectations of a crypto-friendly administration under President-elect Donald Trump, pushed the BTC price above $93,434 on Wednesday.

This rally has helped MSTR stock hit a record high of $335 on Monday, surpassing its previous peak from the dot-com boom in 2000. MicroStrategy’s market performance now exceeds that of major U.S. tech players, including Nvidia, underscoring the impact of its cryptocurrency-driven strategy.

As MicroStrategy and other crypto-related firms like Coinbase and Core Scientific gain traction in the convertible bond market, industry experts are cautioning about sector concentration. Dorian Carrell, a portfolio manager at Schroder Investment Management, noted that the rise in convertible issuance tied to cryptocurrency could lead to increased volatility in the asset class.

Similarly, Pierre-Henri de Monts de Savasse of RBC BlueBay Asset Management highlighted the challenges for portfolio managers who must now consider crypto volatility. The convertible bond market, still recovering from the tech stock downturn in 2022, faces new risks as it becomes more intertwined with the cryptocurrency sector.

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