From Blackouts to Breakouts: What’s Next for MSTR?
MSTR’s share price is likely to grind sideways until they burn through the 21/21 ATM around 22 January 2025, followed by a strong run-up during the blackout period before a 4 February 2025 earnings call.
After the Q4 earnings, MSTR may continue driving upwards. However, with a new 42/42 ATM plan likely locked in, Saylor may use it to maximize BTC Yield, their #1 KPI. This may suppress the BTC price in the short term but fuel it for a more significant run later.
MSTR financial engineering has left the TradFi world baffled. To understand what’s happening, we must take a first-principles approach.
This article is not financial advice; it is just an engineer taking a data-driven approach to understanding MSTR’s price movements based on its unique BTC-powered business plan.
Eager to dive into the details to understand more? Read on.
MSTR’s Blueprint: The Models That Define Its Path
Our MSTR analysis is based on two models:
1. The Ballistic Acceleration Model – based on the relationship between BTC price and MSTR price and
2. Fair Value Model - based on Bitcoin value per share and Bitcoin Yeild.
MSTR and BTC: The Ballistic Connection
The chart below shows the relationship between ln(BTC) and ln(MSTR) since 5 July 2022. Taking the log vastly improves the correlation of any variables that increase by orders of magnitude (e.g., BTC or MSTR).
Notice how the trend line is curving upwards – as the BTC price increases, MSTR increases more. Unlike the linear relationship between BTC price and time since genesis (i.e., the Bitcoin power law), due to MSTR’s aggressive Bitcoin Yield stacking approach, the best fit for the model is a second-order polynomial in the log-log space.
While the second-order acceleration against the BTC price has softened slightly since the 21 November 2024 peak, the ballistic acceleration model remains intact.
Since its release, the live, interactive version of the Ballistic Acceleration model has been extremely popular. It has helped people understand what might happen as BTC increases and MSTR stacks hard.
While the approval of Bitcoin EFTs and increased optimism after the US election have seen Bitcoin advance faster than the usual power-law trend, the traditional four-year halving cycle remains intact.
As shown in the chart below, fuelled by the US Strategic Bitcoin Reserve and nation-state adoption, Bitcoin's price could reach around $340k before the end of next year if it touches the 99.9th percentile quantile.
While infinite exponential growth is technically unsustainable, the fact that passive investment funds and countries are likely to continue buying at any price to build their war chests means that we’re less likely to see massive drawdowns in 2026.
But there are no guarantees. Only time will tell.
Stacking Sats: How Bitcoin Yield Fuels MSTR
The MSTR Fair Value Model complements the Ballistic Acceleration Model by considering BTC Yield. Saylor is acutely aware that the more BTC he can stack in MicroStrategy’s treasury, the more MSTR will rise as the price of BTC rips over the next year.
The chart below shows a strong linear relationship between MSTR’s BTC value per share and its price (since 17 June 2022). This relationship highlights that the more bitcoin they can stack and the more the BTC price rises, the higher the value the market is willing to pay.
While many are feeling the pain of the drawdown from MSTR’s peak a month ago, especially if they FOMOd in and bought at the top, it’s critical to remember that MSTR’s #2 principle is long-term value creation for shareholders.
In the short term, MSTR embraces the motto of volatility = vitality to drive long-term growth.
Higher volatility — both up and down — draws more money into the MSTR ecosystem through options, convertible bonds, and shorting by people who believe MSTR is overvalued. All of this accelerates Saylor’s ultimate mission of converting more fiat capital to Bitcoin, the hardest asset the world has ever seen (e.g., principle #9 on the slide above).
Under Promise -> Overdeliver
In their Q3 earnings call, MSTR set a conservative annual target of 6-10% BTC Yield. But, as you’ll see, this could be the most significant case of under promise and overdeliver in history!
The chart below shows MSTR’s BTC per share since they started stacking in August 2020. To the right of the red dotted line is my forecast BTC per share required to continue along their ballistic trajectory.
To match the Ballistic Acceleration Model, they must achieve a compounding BTC Yield of 0.462% per day (i.e., 14.8% per month or a massive 438% per year). While this figure sounds crazy, they’re on track, as shown in the chart below.
It’s important to note that the BTC yield is a compounding value (i.e., exponential growth), meaning the daily increase is based on the day before.
Selling Pressure or Strategic Play? Decoding MSTR’s ATMs
The chart below shows the future projections of the Ballistic Acceleration Model and the Fair Value Model with optimised BTC Yield and the likely run-up of Bitcoin to the 99.9th percentile quantile.
While the fair value model, based on BTC value per share, predicts how the market should price MSTR based on its current value, markets are not always perfectly efficient. Price is always influenced by fear and greed and oscillates around fair value.
· Sometimes, market participants get greedy due to optimism and positive news, and MSTR becomes overvalued.
· Later, they get fearful, and we get a sell-off, pushing it well below fair value.
The chart below shows the residuals of the MSTR price vs the fair value model. The normal distribution indicates that the fair value model is robust. This understanding enables us to create statistical boundaries around fair value.
The chart below shows how MSTR’s price (red line) occasionally pushes through the lower boundary (5th percentile) and sometimes the upper boundary (95th percentile). However, MSTR’s price ranges between these ‘guardrails’ based on the market value of the BTC they currently hold.
Saylor is eager to demonstrate with weekly announcements that he is relentlessly delivering on this promise to maximise BTC Yield.
The Push and Pull: How Oscillators Signal MSTR’s Moves
This understanding of MSTR’s price variance allows us to create a current percentile rank for its price compared to the ballistic acceleration and fair value models.
The chart below shows that these indicators oscillate between 0 and 100%.
· When both indicators are below 25%, we’re likely in a low-risk place to buy based on historical trends.
· Conversely, when both indicators are above 75%, it might be a good time to derisk and move some profits into BTC for safekeeping until the next pullback.
When we zoom in on recent price action, we can see that MSTR pushed against the upper end of the overbought range from the start of October 2024 until the peak on 21 November 2024.
Since then, MSTR’s price has pulled back into the oversold range while both models continue their upward march. It’s also interesting to note how the indicators have popped up a little with the recent BTC sell-off.
· When both indicators are oversold, you can imagine a spring packed into a box with heaps of stored potential energy, ready to accelerate as soon as it’s released.
· Conversely, when both indicators are in the overbought zone, you should beware that selling pressure may be coming to pull the price back towards the normal range.
The Countdown Begins: Predicting MSTR’s Next Big Move
When trying to predict where MSTR will go, it’s critical to note that it is built on the foundation of Bitcoin. Its fate is tightly tied to the BTC price.
Where is Bitcoin Headed?
As shown in the chart below, my BTC model predicts a pullback between now and early January based on previous halving cycles, US election cycles, and annual variation. This is likely because investors often rebalance their portfolios at the end of the year, pay taxes, and derisk over the holidays.
It’s hard to know whether BTC will drop lower than the pullback after the last FOMC meeting, where the Fed indicated they would not be lowering rates as quickly as expected. But it might be wise to be cautious until the new year. The model suggests a low on 7 January 2024 with a run-up through the US presidential inauguration.
Of course, existential-level events like world wars and pandemics could undermine this. But we should have even more confidence after 20 January.
MSTR’s ATM Selling and Blackouts
Looking at what’s happened in the past can give us some insights into what might happen. While MSTR doesn’t announce its blackout periods, the data can provide clues.
In the lead-up to earnings announcements, companies selling their stock into the market (i.e., ATMs) is considered insider trading and is hence prohibited for some period before the earnings calls.
Interestingly, Saylor announced the earnings call on 17 October 2024, which appears to be the end of the initial ATM that started on 1 August 2024 in preparation for the 30 October earnings call.
When we zoom in on price action during this period, we can see that the ATM appears to have suppressed MSTR’s price between 1 August and 17 October 2024. During the blackout period from 17 October 2024, with no ATM selling, the price increased from the 66th percentile to the 95th percentile band (as depicted by the big red arrow).
While MSTR hasn’t yet announced its next earnings call, Trading View (and other sources) show an anticipated Q4 earnings announcement on 4 February 2025. Subtracting 13 days from 4 February 2025 gives us a likely start of the blackout period of 22 January 2025. This is also about when MSTR will likely exhaust the $21b ATM announced on 30 October 2024.
Hence, it’s likely that we’ll see continued selling pressure and volatility from the ATM until then. This artificial selling pressure compresses the spring for the next move up to maximize volatility (which, remember, is vitality).
But if history repeats, we could see MSTR’s price jump from the 5th percentile line at $460 on 22 January 2024 to the 95th percentile boundary at $1300 around the next earnings call on 4 February 2025.
The US presential inauguration is scheduled to occur around the start of the Q4 ATM blackout, and there are rumours that Trump will announce plans for a strategic Bitcoin reserve on day 1. None of these bullish factors are baked into the historical data in the model.
It's hard to know where MSTR’s price will go after the Q4 earnings call. However, MSTR will likely announce Q4 earnings way above most people’s expectations, qualifying it for the S&P500 index. The excitement around the Strategic Bitcoin Reserve will increase, causing many to FOMO into MSTR.
However, on the other hand, Saylor will likely be armed with a 42/42 plan to be announced at the earnings call, which will enable him to hit the ATM either even harder and suck more money from the equities market into Bitcoin. While this will suppress the price in the short term, it will drive the long-term price of MSTR even higher.
What’s Your Take on MSTR’s Next Move?
MSTR’s journey continues to captivate and challenge traditional financial norms with its bold Bitcoin-driven strategy.
Every move shapes its trajectory in fascinating ways, from the innovative Ballistic Acceleration and Fair Value Models to the strategic use of ATMs and blackouts.
As Bitcoin’s price surges and MSTR’s BTC yield strategy unfolds, the future promises both volatility and opportunity.
What do you think about MSTR’s next move? Are you optimistic about its trajectory, or do you see potential challenges ahead?
Share your thoughts in the comments below—we’d love to hear your perspective, ideas, and questions for future articles!