Shares of MicroStrategy Inc MSTR, led by Michael Saylor, declined over 5% in pre-market trading as Bitcoin BTC/USD prices fell below the $100,000 mark. This decline coincided with a drop in U.S. index futures.
What Triggered the Decline?
The negative trend in cryptocurrencies and equities was compounded by the rise of DeepSeek in China, which became the most downloaded app on Apple Inc.’s App Store this weekend. DeepSeek launched an AI model that operates more efficiently and at a lower cost than traditional methods, challenging the belief that large investments in powerful GPUs are necessary for effective AI applications.
Market Reactions to Economic Indicators
As Bitcoin and MicroStrategy’s stock continue to decline, the opening of CME futures, along with the FedWatch tool indicating a 99.5% chance of no interest rate changes at the Federal Open Market Committee (FOMC) meeting on January 31, adds to the tension. Similar projections for no change stood at 65.6% for March and 44.4% for May.
Tax Concerns Weigh on Investors
Adding to the challenges faced by MSTR, a recent Wall Street Journal article highlighted potential tax implications from the 2022 Inflation Reduction Act. This act may impose a 15% tax on the unrealized gains of companies holding Bitcoin.
See Also: Will Michael Saylor’s MicroStrategy Incur Tax Liabilities On Unrealized Bitcoin Gains? X Users Call The Claim ‘False,’ But Here’s What You Need To Know
Why This Matters
As market-wide concerns escalate due to DeepSeek’s advancements, there persists a critical lack of liquidity signals amidst potential interest rate stability. Furthermore, with six of the ‘Magnificent Seven’ stocks set to release earnings this week, various factors are influencing the U.S. market landscape.
Global macroeconomic expert Anish Nanda shared insights, stating, “It remains too early to evaluate the risks for U.S. tech companies. We must observe whether DeepSeek can sustain its innovative edge and maintain a leadership role in this rapidly evolving sector.”
Current Market Status
At the time of this report, MSTR had dropped over 5% in pre-market trading, while Bitcoin was down by 5.1%, priced at $99,259 per coin. Analysts from Benzinga suggest a consensus ‘buy’ rating for MicroStrategy, with a target price of $449.5 per share. Recent analyst insights from Benchmark and Bernstein forecast an upside potential of 87.85% for MSTR.
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Photo courtesy: MicroStrategy
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