Is MSTR’s Ballistic Rocket Just Warming Up?
The MSTR Ballistic Acceleration Model presents bold forecasts for MSTR's future price, grounded in its accelerating relationship with Bitcoin since it began its at-the-market (ATM) convertible debt to raise more money to stack more BTC.
While we can’t know the future or whether this trend will continue, this article shows that MicroStrategy might be just getting started.
The time series analysis detailed in this article shows that, other than the past fortnight of heavy ATM selling, which has kept MSTR’s price suppressed, the MSTS's ballistic acceleration is gaining momentum.
BTC-Powered Growth: Understanding MSTR’s Ballistic Momentum
The MSTR Ballistic Acceleration Model reveals the fascinating interplay between Bitcoin's price movements and MSTR's market behaviour.
The chart below shows the relationship between BTC and MSTR prices since July 2022, demonstrating an excellent fit with a second-order polynomial in log-log space.
In practical terms, this means MSTR’s growth is outpacing BTC as BTC climbs higher due to MSTR’s primary KPIs:
1. Bitcoin Per Share, and
2. Bitcoin Yield (i.e. the rate of change in bitcoin per share).
While aggressive ATM selling may keep the MSTR price suppressed in the short term, it enables them to stack more BTC, fueling a faster ascent once the price of BTC continues to increase.
Turning Dollars into Digital Gold: MSTR’s Financial Refinery
Determining BTC's fair value is challenging using traditional accounting methods. This ongoing argument over price plays out in the media market with volatile swings in price.
While many people still see MSTR as a Bitcoin holding company or Bitcoin EFT and value it based on its mNAV (multiple of net asset value), many major market players obviously see it as more valuable. Perhaps this is because they still can’t access BTC directly, or they see the potential future of a company with more than 2% of the future of money.
What we do know is that MSTR is delivering financial engineering on a never-before-seen scale, so it’s hard to price its fair value using traditional models—modern-day alchemy, turning $1 of fiat dollars into $2-3 worth of Bitcoin, the hardest asset the world has ever seen.
BTC Yield Unleashed: The Driving Force Behind MSTR’s Growth
Since starting to buy BTC, MSTR has gained attention for its stellar returns. But in August 2024, MSTR began an 'At-the-Market' (ATM) share offering strategy, allowing it to issue new shares at prevailing market prices, converting dollars into 2- 4 times the value in bitcoin.
As discussed in BTC Yield: MicroStrategy’s Winning KPI, the key to MSTR’s exponential growth in share price is MSTR’s laser-eyed focus on BTC Yield (i.e. the rate of change in BTC Per Share).
To keep pace with the Ballistic Acceleration Model, MSTR must achieve a daily compounding BTC yield of 0.343%, equating to a massive 250% compound annual growth rate in bitcoin per share, way above their 6-10% per year target.
This growth rate sounds crazy, especially when we add on the growth potential for the underlying BTC. But they’ve been ahead of schedule recently, with a 0.36% daily BTC yield.
Can the Exponential Growth Continue?
To understand if the rate of acceleration between BTC and MSTR is increasing or slowing down, I’ve run the second-order polynomial regression in the log-log space over different periods from when MSTR began their ATM approach.
This time series analysis approach was inspired by aspk32's amazing animation showing the evolution of the BTC power law. I still remember the first time I saw this—it was a massive ‘ah-ha moment’ in my understanding that BTC was not going to 0! Unfortunately, I’m just using ChatGPT for the analysis, so forgive me if it’s not as pretty.
Analysing second-order regressions across various periods shows that MSTR's acceleration out ahead of BTC has increased as MSTRs deploy their ATMs and convertible debt strategies. Only over the past fortnight has the rate of acceleration slowed as MSTRs hit the ATM harder to convert more dollars to Bitcoin.
Returning the analysis to the normal scale (rather than log-log) helps us see this change in acceleration more clearly. Notice in the top right corner of the chart that the rate of acceleration decreases only in the most recent regression through the entire data set.
While the model's projections are super bullish, it's critical to note that this analysis is based on 623 days of data. The model's robustness will improve as more data emerges, offering a clearer picture of MSTR's trajectory. But to date, as we collect more data, the MSTR Ballistic Acceleration Model becomes more robust, increasing R2 and decreasing Akaike Information Criterion (AIC). We’ll continue to update the model to provide an understanding of where MSTR may be headed based on the relationship to date.
While the Bitcoin Acceleration Model makes super bullish predictions for MSTR’s future price, it could become even more bullish as more data comes in, especially if MSTR can continue executing on its plan to drive up bitcoin value per share by pushing bitcoin yield as high as possible.
Where Are We Headed?
Unfortunately, MicroStrategy’s ATM selling keeps the MSTR share price down in the short term (as shown in the chart below since 21 Nov 24). But we also know the share price tends to blast off when they stop the ATM.
While there’s no way of knowing precisely when MSTR will push the ATM hard and back off, we can get clues from the past.
The chart above shows a substantial 44% run-up before the Q3 earnings report on 30 October 2024. This was likely because MSTR could not roll out its ATM during the fortnight before the earnings report due to insider trading provisions. I’ve also projected this forward on the right-hand side of the chart next earnings report released on 4 February 2025.
The next earnings report will be the first that they can show the value of their BTC on their balance sheet under the new FASB accounting rules, and it could also coincide with some significant announcements in the political space.
Where Are We Now?
The Ballistic Acceleration Model offers a fascinating glimpse into MSTR's potential trajectory as BTC continues to climb.
However, perhaps the most helpful feature is the recent addition of a live chart showing MSTR’s deviation from the ballistic model over time.
If you believe in BTC and MSTR’s playbook, the red bars in the bottom right of the chart will give you some comfort that MSTR is just hitting the ATM hard, fueling up for the next ballistic ascent.
We’d love to hear your thoughts! What do you think about the MSTR Ballistic Acceleration Model and its predictions? Are there specific trends or analyses you’d like us to explore? Leave a comment below and let us know—we’re always looking to dive deeper into the data to answer the most interesting questions.