In the wake of its second-quarter 2024 earnings report, MicroStrategy Inc. (NASDAQ:MSTR) experienced a significant pre-market drop of 14.71% on Monday.

What Happened: According to Benzinga Pro, MicroStrategy’s stock price took a hit, trading at $1,235.01 after closing at $1,447.99 on Friday, closely mirroring the recent 9.38% decline in Bitcoin (CRYPTO: BTC). The company’s investment strategy, which heavily relies on Bitcoin holdings, is believed to be the cause of this downturn.

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Why It Matters: MicroStrategy’s fortunes have been closely tied to Bitcoin since it adopted the cryptocurrency as its primary reserve asset in 2020. This move, a first for a publicly listed company, led to a significant increase in the stock returns, even of the so-called “Bitcoin Development company,” outpacing Bitcoin’s gains.

However, the company’s stock has been showing signs of volatility, moving below its 50-day moving average of $1,542 and trading at $1,492. This downward trend is not unique to MicroStrategy, as other crypto-linked stocks like Coinbase Global, Inc. (NASDAQ:COIN) have also been trading lower amid the Bitcoin weakness.

The cryptocurrency market has been on a rollercoaster ride, with Bitcoin and Ethereum experiencing significant fluctuations. On Monday, Bitcoin briefly fell below $50,000 for the first time in nearly six months before rebounding.

The crypto market downfall is attributed to several factors including Middle East geopolitical tensions, the delay in U.S. Federal Reserve rate cuts, massive long liquidations, and negative Bitcoin and Ethereum ETF flows.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari