As bitcoin approaches $0.1 million and hits a new high, 'bitcoin whales' $MicroStrategy (MSTR.US)$ experienced a heart-stopping moment: the stock price plummeted by 30% at one point.

Yesterday, MSTR continued its previous soaring trend in early trading, surging by 14% at one point to a historical high of $543. However, MSTR's stock price experienced a dramatic reversal during the trading session, with a staggering pullback of over 31% from the intraday high to the low point, ultimately closing down by over 16%.

At the height of the bitcoin frenzy, microstrategy's "myth of wealth creation" faced a heavy blow. The "symbiotic relationship" between microstrategy and bitcoin: by issuing stocks and bonds to finance the purchase of bitcoin, driving up bitcoin prices, which in turn further boosts microstrategy's stock price.

However, this relationship suddenly malfunctioned last night, indicating what? Is MSTR's sudden plunge a brief adjustment or a signal of an impending storm?

On November 20, Cullen Roche, the founder of the fund company Discipline Funds, commented that MSTR might be the most successful "investment bank" in the world, either the greatest achievement in financial history or the most reckless thing.

In Roche's view, MSTR's frenzy in buying coins is indeed very successful, but it looks very much like a Ponzi scheme to some extent. If he were in that position, he would definitely want to leave quickly, declare victory, and then go buy... anything I want.

Currently, Citron Research is shorting MSTR and claiming that the company has actually turned into a bitcoin investment fund, showing great respect for MSTR CEO Saylor, but he must also realize that MSTR has become overheated.

Surging by 3000%! Is it time for the most successful stock in the past 5 years, MSTR, to declare victory and exit?

On his website, Discipline Funds founder Roche discussed the relationship between MSTR and Bitcoin with a somewhat joking tone, pointing out that the company's approach is extremely clever and risky at the same time. To some extent, it looks very much like a Ponzi scheme.

Is MSTR really the most successful 'investment bank' in financial history, or the most reckless? Roche is puzzled, but he suggests that this may be the moment for Saylor to declare victory and retreat.

When it comes to MicroStrategy—-I can't stop falling in love with this story. I have been saying for many years that this is either the greatest thing in financial history or the most reckless. I don't know which one it is, but to me, there really is no middle ground. In some ways, it looks very much like a Ponzi scheme. MSTR finances the purchase of Bitcoin by selling bonds, and these purchases drive up the price of Bitcoin, which in turn allows MSTR to issue more bonds. It's all very clever, as long as the price of Bitcoin continues to rise, the brilliance can continue. As long as it keeps going up.

I once joked that MSTR has become the world's most successful investment bank, except that they are not helping capital formation, but financing the 'digital rise'. So far, this practice has indeed been very successful. Saylor (CEO of MSTR) has won. In fact, you can even say that he has already won. Now he can exit, then announce 'I have forever won the entire financial industry'. MSTR has surged 3000% in the past 5 years. This makes one wonder— if Saylor is right, with a capital cost of 15% per year, then the returns created by MSTR in the past 5 years are roughly equivalent to a 24-year return. When should you stop and say 'I won'? Or can you stop?

I don't know the right answer. I'm just an old-fashioned traditional finance person. But personally— I would definitely be very eager to pack up and leave, declare victory, and then go buy... whatever I want.

MSTR's cumulative increase in the past 5 years once reached 3000%, but due to a sudden sharp drop, the company's current cumulative increase is 2520%. Yet it still remains the best-performing stock of the past 5 years, surpassing even Nvidia and Celsius Holdings.

In Roche's view, MSTR's investment strategy in bitcoin is filled with risks, but also brings huge returns, and at the same time has a taste of financial speculation.

Shorting MSTR by Citron Research.

Currently, Andrew Left's Citron Research is shorting MSTR, believing that MSTR has actually become a bitcoin investment fund, with its stock price being overheated and detached from the fundamentals. He posted on X:

As investing in bitcoin becomes easier than ever, MSTR's trading volume has completely deviated from the fundamentals of bitcoin. While Citron still remains bullish on bitcoin, we have hedged through shorting MSTR. We have great respect for Saylor, but even he must know that MSTR is overheated.

From a fundamental perspective, MSTR's market cap is nearly three times the value of the held bitcoins, and MSTR's investors actually paid $0.25 million per bitcoin, while the market price is less than $0.1 million. Citron is not the first company to suggest hedging bullish bitcoin positions by shorting MSTR. In March this year, another well-known institution, Kerrisdale Capital Management, also made a similar suggestion to go long on bitcoin but short on MSTR stocks.

Looking back at MSTR's history, bitcoin once saved this company from the abyss.

MSTR was a typical victim of the 2000 internet bubble, with its stock price plummeting from $300 to $0.42. In 2020, the company's founder Saylor made a game-changing decision to transform the company into a cryptocurrency investment platform: All in bitcoin, calling bitcoin the 'most valuable asset in the world.' This decision officially paved the way for MSTR's current glory.

However, with last night's sharp decline, is it time to test microstrategy?

Editor/new