Disclaimer: The analyst who wrote this article owns shares of MicroStrategy (MSTR).
It's been a rough month for MicroStrategy (MSTR), a software development company turned Bitcoin (BTC) accumulator. The company's stock has fallen nearly 50% since November, when it joined the Nasdaq 100 index, and peaked at a 600% rise since the beginning of the year.
Still, the Tysons Corner, Virginia-based company still has a massive 342% return in 2024, which ranks among the hottest crypto-related assets in traditional finance (TradFi). Maximum return.
This year has been volatile, with geopolitical and technological developments disrupting financial markets. Continued wars in Eastern Europe and the Middle East, elections around the world, the unwinding of the yen carry trade in August, and the growth of artificial intelligence (AI) have all left their mark.
MicroStrategy's profits were nearly double that of chipmaker Nvidia (NVDA), which returned 185% from producing integrated circuits needed for AI applications, making it the highest among the so-called Grand Seven tech stocks. Masu. The next best Meta Platform (META) sold 71%.
Bitcoin itself has risen 100% in a year that included April's reward halving and multiple all-time highs. Demand for the largest cryptocurrency was driven by the approval of spot exchange-traded funds (ETFs) in the U.S. in January, while Bitcoin's two biggest competitors, Ether (ETH), rose 42%, Solana (SOL) rose 79%.
ETF iShares Bitcoin Trust (IBIT) also returned more than 100%, becoming the fastest ETF in history to reach $50 billion in assets.
Bitcoin mining companies have been a total disappointment. The Valkyrie Bitcoin Miners ETF (WGMI), a proxy for mining stocks, rose nearly 30%. This is despite demand for computing power from miners and power supply contracts from artificial intelligence and high-performance computing (HPC) companies. Still, individual companies benefited, with BitDeer (BTDR) in particular up 151% and WULF (WULF) up 131%.
Nevertheless, miners' profits outperformed the broader stock market. The tech-heavy Nasdaq 100 Index (NDX) rose 28%, while the S&P 500 Index (SPX) rose 25%. The S&P 500 also lagged gold's 27% rise. This valuable commodity has exceeded its equity level in three of the past five years.
Concerns about U.S. inflation and budget deficits increased geopolitical uncertainty, prompting a significant rise in U.S. Treasury yields, moving in the opposite direction to prices.
The 10-year Treasury yield has risen 15% to 4.5% over the course of the year, and an astonishing 100 basis points since the Federal Reserve began cutting rates in September.
The iShares 20-Year Treasury ETF (TLT), which tracks bond prices, is down 10% this year and 40% over the past five years.
Meanwhile, the dollar showed strength. The DXY Index (DXY), a measure of the U.S. dollar against a basket of currencies from the U.S.'s largest trading partners, rose to its highest since September 2022.
West Texas Intermediate (USOIL), the U.S. crude oil price benchmark, ended the year little changed, up less than 1% to about $71 per barrel. But the last 12 months have been a turbulent one, with prices rising to nearly $90.
As we enter the new year, all eyes will be on the debt ceiling debate, President-elect Donald Trump's policies, and whether the United States can continue its impressive growth story.
