Bitcoin-proxy stock MicroStrategy fades after morning rally as cryptocurrencies fall

Shares of Strategy failed to hold on to an early pop on Monday as the bitcoin-proxy stock reversed course amid a crypto market sell-off.

The stock closed down 1.8% after jumping more than 14% when the market opened. The company, formerly known as MicroStrategy, has been buying bitcoin for its balance sheet over the past several years and has increasingly begun to trade in tandem with the leading cryptocurrency.

The volatile trading comes after bitcoin rallied sharply on Sunday, when the stock market was closed, but fell more than 8% on Monday, according to Coin Metrics. The broader stock market also sold off on Monday.

The crypto rally over the weekend coincided with President Donald Trump‘s announcement that the U.S. would create a strategic crypto reserve, which would include bitcoin and four other coins.

“There’s no way to interpret this other than this is bullish for bitcoin and is bullish for the entire U.S. crypto industry,” Michael Saylor, executive chairman at Strategy, said Monday on CNBC’s “Money Movers.”

This could help drive the price of bitcoin higher, depending on how large the reserve ends up being. A higher market price of bitcoin would raise the value of the crypto already held by Strategy.

“In our view, a big beneficiary of the bitcoin reserve (bitcoin will still be the lion’s share of the reserve) is MSTR. MSTR’s corporate Bitcoin reserve stands today at ~500K BTC ($47Bn; ~2.5% of Bitcoin supply). This would further open up capital market access for MSTR and hyper-scale its Bitcoin strategy,” Bernstein analyst Gautam Chhugani said in a note to clients.

On Monday morning, Strategy disclosed that it did not sell any common stock between Feb. 24 and March 2 under an at-the-market offering plan. Strategy also did not purchase any bitcoin during that period.

The company held 499,096 bitcoin as of Sunday.