Disclaimer: The analyst who wrote this article owns shares of MicroStrategy (MSTR)
It’s been a tough month for MicroStrategy (MSTR), the software developer turned bitcoin (BTC) hoarder. Its shares have fallen nearly 50% since November, when it joined the Nasdaq 100 index and hit a high of 600% gain since the beginning of the year.
That still leaves the Tysons Corner, Virginia-based company with a whopping 342% lead in 2024, the biggest return among the highest-profile crypto-linked assets in traditional finance (TradFi).
It has been a volatile year, full of geopolitical and technological events that shake the financial markets. The continuing wars in Eastern Europe and the Middle East, elections around the world, the elimination of the yen carry trade in August, and the growth of artificial intelligence (AI) have all left their mark.
MicroStrategy’s gain is nearly double that of Nvidia (NVDA), the chipmaker whose production of integrated circuits needed for AI applications fueled a 185% return, the best among the so-called Great Seven tech stocks. The next best option, Meta Platforms (META), scored 71%.
Bitcoin itself is up 100% in a year that included the April rewards halving and multiple all-time highs. Demand for the largest cryptocurrency was boosted by the January approval of spot exchange-traded funds (ETFs) in the U.S. Bitcoin outperformed two of its biggest competitors, ether (ETH), with a 42% surge. , and Solana (SOL), with an increase of 79%.
Among ETFs, iShares Bitcoin Trust (IBIT) also returned over 100% and became the fastest ETF in history to reach $50 billion in assets.
Bitcoin mining companies, in general, are disappointed. Valkyrie Bitcoin Miners ETF (WGMI), a proxy for mining stocks, is up just under 30%. This is despite demand for miners’ computing capabilities and power supply deals from artificial intelligence and high-performance computing (HPC) companies. Still, individual companies benefited, notably Bitdeer (BTDR), which added 151%, and WULF (WULF), which gained 131%.
However, miners’ profits outpaced the broader stock market. The tech-heavy Nasdaq 100 Index (NDX) added 28%, while the S&P 500 Index (SPX) rose 25%. The S&P 500 also trailed gold’s 27% rise. The precious commodity has outperformed the stock index in three of the last five years.
Concerns about US inflation and the country’s budget deficit added to geopolitical uncertainties and caused a massive rise in US Treasury yields, which move in the opposite direction to prices.
The 10-year Treasury yield has risen between 15% and 4.5% over the year and has surprisingly gained 100 basis points since the Federal Reserve began cutting interest rates in September.
The iShares 20+ Year Treasury Bond ETF (TLT), which tracks bond prices, fell 10% this year and has lost 40% over the past five years.
The dollar, on the other hand, showed its strength. The DXY index (DXY), a measure of the dollar against a basket of currencies of the United States’ largest trading partners, rose to its highest level since September 2022.
West Texas Intermediate (USOIL), the US oil benchmark, ends the year little changed, up less than 1% to around $71 a barrel. But it was a bumpy road, with the price rising to nearly $90 at times over the past 12 months.
As we head into the new year, all eyes will be on the discussion over the debt ceiling, the policies of President-elect Donald Trump and whether the United States can continue its impressive growth story.
