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MicroStrategy, a business intelligence company led by co-founder and chairman Michael Saylor, made headlines once again by announcing a $2.1 billion acquisition of Bitcoin (BTC).
Interestingly, this is the fifth consecutive Monday that the Tysons Corner, Virginia-based company has announced a major acquisition of a major cryptocurrency on the market, demonstrating confidence in BTC's outlook and price growth. .
Microstrategy's Bitcoin Stashes Surpass Nvidia
According to a filing with the U.S. Securities and Exchange Commission (SEC), MicroStrategy purchased 21,550 Bitcoin tokens between December 2 and December 8 at an average price of $98,783 per token.
Over the past four years, Saylor and his company have amassed more than $41 billion worth of Bitcoin. This is the step Thaler took to transform the software company's survival strategy.
In October, Saylor announced that it would raise $42 billion over three years through a combination of on-market stock sales and convertible debt offers to strengthen its BTC acquisition strategy.
The rate at which MicroStrategy is accumulating Bitcoin has significantly accelerated in the month since President Donald Trump's election on November 5th. It took nearly a year to collect the first 100,000 coins, but it took just two weeks to grow the holdings from 300,000 to 400,000.
This vast stash of Bitcoin is now worth more than the cash reserves of computer giant Nvidia and nearly every non-financial company listed on the S&P 500 index.
Liquidity and credit concerns
Despite the bullish outlook for BTC, researchers believe that MicroStrategy's methodology is not without risks. In four out of the past five weeks, the company has purchased Bitcoin at an average price higher than the average market price, raising questions about the long-term viability of this approach.
The company's stock (MSTR) has risen more than 500% this year, attracting significant interest from investors, while hedge funds are taking advantage of Bitcoin's volatility to acquire the company's notes for market-neutral arbitrage techniques. It's starting to happen. But analysts warn that continuing to rely on Bitcoin could be risky.
Min Jeong, a research analyst at Presto Research, said that while the rise in the price of Bitcoin creates a positive feedback loop (increasing stock prices enable financing for further Bitcoin purchases), this cycle pointed out that it is highly dependent on the rise in virtual currencies. “If the market changes, there could be serious consequences,” Jung told Bloomberg.
A significant decline in Bitcoin's market value could jeopardize the company's financial viability and raise liquidity and credit concerns. The Company's revenue generation opportunities outside of the major enterprise analytics software markets will be limited.
Gracie Chen, CEO of cryptocurrency exchange Bitget, expressed these concerns, saying that falling Bitcoin prices could jeopardize MicroStrategy's ability to manage rising debt levels. pointed out.
“The company’s huge BTC holdings pose a risk of market concentration,” Chen explained. “A major crash could lead to significant price fluctuations, impacting not just Bitcoin but the broader crypto ecosystem.”
The daily chart shows that the price of BTC is below the $100,000 mark. Source: BTCUSDT on TradingView.com
At the time of writing, BTC is trading at $97,700, down 3% in the past 24 hours.
Featured image from DALL-E, chart from TradingView.com
