Hello Readers,
I hope all of you are doing well and enjoying the day with your loved ones. But if you are a crypto enthusiast then most probably you are also keeping an eye on the crypto market and related news l, because many are anticipating an Altcoin bull run soon. Today while surfing, I came across another pretty big news and thought to share it with you all, as Microstrategy has just bought another 1,070 $BTC. So in this post, I will be talking about Microstrategy and its aggressive Bitcoin accumulation and how it is impacting the Bitcoin’s price. So if you are interested, let’s take a dive without any further ado.
Bitcoin has again crossed the 100k price mark today and strengthened its position above the level and is currently being traded for around $101,000. This sudden uptrend in its price came shortly after MicroStrategy’s latest Bitcoin purchase. This gigantic move from Microstrategy has reignited discussions on a global level about this US-based company’s strong belief in Bitcoin and cryptocurrency again.
Bitcoin’s price reached a new all-time high of around 107.1k USD on 17th December last year, leading the pump season but then started getting rectified and came down to 92k USD before the year's end. But just recently its price started skyrocketing again after MicroStrategy announced its acquisition of 1,070 more Bitcoins for a whopping $101 million. This recent purchase, which was made at an average price of $94,004 per Bitcoin, marked one of the company’s smaller BTC acquisitions in recent months. But Despite its small size, this bold move has been able to develop a fast significant impact and has successfully pushed Bitcoin’s price from $98,000 to over $101,000 within just a couple of hours, as Bitcoin has reached its highest point since December 19.
This positive response has changed the game if we compare it with previous occasions when Bitcoin’s price actually dipped following MicroStrategy’s purchase announcements. For example, the company’s November and December BTC purchases (some of them are worth billions) were quickly followed by declines in BYC’s price, including the recent price drop from around $94,000 to $91,300. However, this time it seems the market has taken a clear U-Turn and appeared more optimistic compared to previous incidents, as we can clearly see from the current price movement.
MicroStrategy’s Smart Strategy
For those who don’t know, MicroStrategy is a well-known US-based business intelligence firm and its headquarters is in Tysons Corner, Virginia. Though it is a Tech company that provides Business Intelligence, Mobile software and Cloud-based services, it is now redefining itself with its aggressive Bitcoin investment, not to mention its actions have earned it a place among the top 100 publicly listed US companies as well. The company, led by co-founder and Chairman Michael Saylor is now holding a total of approx 447,470 Bitcoins, which it has acquired at an average price of $62,503 per Bitcoin. This massive BTC holding represents a total investment of about $27.97 billion that this company has made in cryptocurrency, which also denotes their seriousness with crypto.
Now, we are obviously talking about Billions of Dollars here and to make it a reality and fund these purchases, MicroStrategy has developed a mix of methods, which includes issuing stock and convertible bonds to its investors. Most recently, the company has also announced its future plan to raise another $2 billion through the issuance of perpetual preferred stock. This initiative is part of a broader strategy to generate a total of around $42 billion by the end of 2027 through a combination of equity and fixed-income instruments. As announced, this perpetual preferred stock will be senior to its Class A common stock and may include features like convertibility, dividends and redemption options to give its investors an upper hand and trust.
Balancing Risk and Reward
MicroStrategy’s approach to aggressively acquire Bitcoin and become a major institutional player in the crypto sector has drawn both praise and criticism because…
- On one hand, Supporters are welcoming its decision stating that the company’s aggressive Bitcoin accumulation is developing a strong ground position for long-term gains, hoping that institutional interest in cryptocurrency continues to grow.
- On the other hand, Critics are expressing concerns about possible share dilution and for well-known volatility associated with Bitcoin’s sharp price swings. Especially the retail investors are worrying about the impact on MicroStrategy’s stock price. Now this is also a valid concern as the $MSTR share price closed at $330.66 recently, which is far away from its record high of $473.83 on November 20 last year.
The company’s smart use of perpetual preferred stock is seen as a witty but quick solution to attract new investors seeking lower volatility, such as insurance companies and pension funds. Microstrategy believes that in the long run, the price of Bitcoin will only go upwards because of its fundamentals. So, accumulating BTC now and aggressively and holding will benefit the company far more than buying slowly for a long time span. Hopefully, this risky but bold move could possibly provide MicroStrategy with greater flexibility and more purchasing power to continue its Bitcoin accumulation strategy while lowering risks.
Market Reactions
No doubt that the latest Bitcoin purchase from Microstrategy has not only boosted the cryptocurrency’s price but has also shown a shift in the market dynamics. For example, many Hedge funds have been seen engaging in convertible arbitrage strategies, buying MicroStrategy’s bonds while also shorting on its shares to capitalize on stock volatility. Meanwhile, retail investors are seen to remain cautious, with some concerned and raising voices about the dilution effects of increasing authorized shares of Class A stock from 330 million to 10.3 billion. Anyway, the vote on this share increase proposal is set for January 21, with analysts expecting it to pass considering Saylor’s significant influence as a major shareholder in the company. However, without a doubt, this move could make MicroStrategy’s stock even more volatile than present time.
Microstrategy’s Long-Term Vision
MicroStrategy’s aggressive Bitcoin accumulation and holdings have grown significantly over the past years, with the company consistently making opportunistic purchases. For example, it recently sold a whooping 319,586 of its shares to collect $101 million between December 30 and 31 and then used the funds to make this recent purchase of 1,070 Bitcoins. This follows a series of Bitcoin acquisitions in last year December, including the purchase of 2,138 Bitcoins at an average price of $97,837 and another 5,262 Bitcoins at $106,662.
Despite all these hurdles and challenges, most financial analysts remain optimistic about MicroStrategy’s strategy. For example, Benchmark analysts are showing a "buy" rating on the $MSTR stock and set a price target of $650. They believe the company’s innovative treasury operations justify the premium at which its stock trades relative to its net asset value (NAV).
Last but not least, it feels unreal because Bitcoin was once used to buy pizza and now financial institutions are buying this asset like there’s no tomorrow. This clearly indicates its true potential and a bright future for both Bitcoin and the whole Cryptocurrency realm.
Information Source:
That’s it for today readers and I hope you liked reading my post about Microstrategy’a recent Bitcoin purchase. Let me know your thoughts regarding this news in the comment section below and I will be seeing you all in my next post.
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Outstanding content! 🏆
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So micro strategy finally pulled this one through i didnt follow up with the trend when ther announced their goals and plans for btc kudos to them