There's an interesting realization I just had while following the crypto market recently. While many people focus on directly buying Bitcoin, some experienced investors are looking at MicroStrategy (MSTR) with a different level of interest.

Adam Back, CEO of Blockstream, recently made a pretty convincing point on X. He suggests that MSTR stock is trading at a significant discount relative to the amount of Bitcoin the company holds. But what exactly is MSTR? Simply put, it's a software company owned by Michael Saylor — known as a hardcore Bitcoin enthusiast. The company currently holds about 189,150 BTC, worth nearly $8 billion.

According to Adam Back's calculations, if we consider only the value of MSTR's software business, which is around $2 billion, then a reasonable valuation for the company would be between $8T and $11.5 billion. This means the stock price of MSTR should be around $625–$685. Interestingly, MSTR surged from $329 to $685 in late Q4 2023, far outpacing Bitcoin's growth during the same period.

However, after Bitcoin ETF approvals and launches, both assets experienced a sell-off. MSTR was hit harder, dropping to $482 in mid-January — a 30% decline from its peak. This isn't surprising, as investors previously viewed MSTR as an unofficial Bitcoin ETF. Other related companies like Coinbase and Cleanspark also suffered similar impacts when official ETFs launched.

The question now is: is MSTR still expensive? Some point out that the company still owes $2 billion, which needs to be factored into the valuation. However, Back comments that this debt has long been in place and will "increase" over time. Some analysts also note that even if Bitcoin rises to $200,,000, MSTR could still perform worse than pure Bitcoin or ETF products like BlackRock's IBIT.

Overall, MicroStrategy has increased its Bitcoin holdings by 36%. Is it a better investment opportunity than Bitcoin itself? That’s a question each investor needs to answer based on their own strategy.