Why Strategy Stock Leaped Almost 12% Higher on Friday
Key Points
This, in turn, was mostly due to developments in the Iran war.
Hopes grew for a resolution to the conflict.
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Strategy (NASDAQ: MSTR), a one-time pure tech company that has essentially morphed into a Bitcoin treasury operation, saw its stock soar on Friday amid gains in its favorite asset. Bitcoin showed signs of life after trading in a narrow price band since the beginning of the Iran war and with that, Strategy's shares rose by nearly 12%.
Rising in sympathy
Strategy functions as something of a leveraged play on Bitcoin, so when the leading cryptocurrency rises, its stock tends to jump even higher (of course, on the downside, when Bitcoin goes south, Strategy can take quite a dive).
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Happily for the company and its investors, the No. 1 digital coin was bouncing at the end of the week. For the first time since the price dive it endured at the end of January, it broke above the $76,000 level on Friday.
That coincided with a breakthrough in the Iran war, when both U.S. and Iranian officials announced that the Strait of Hormuz had been reopened to shipping. There were still concerns about mines in the waters, and the American side insisted it was maintaining its naval blockade. Regardless, this represented real progress that had a chance of becoming permanent.
Hopes for peace
Investors get less risk-averse when geopolitical risks ease, so it's little wonder Bitcoin and many other cryptocurrencies were doing well that day.
The big question is whether the mini-rally we witnessed on Friday will be sustained. Much of this, of course, will depend on developments in the war, and there's reason to be optimistic. Both the U.S. and the Iranians seem eager to find solutions. And with the 10-day ceasefire agreed between Israel and Lebanon, other involved nations are going in the same direction.
For the moment, then, the Bitcoin-fueled Strategy pop looks like it might have a bit more room to run.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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