MicroStrategy, the business intelligence firm led by co-founder and president Michael Saylor, has made headlines again with the announcement of a $2.1 billion Bitcoin (BTC) acquisition.
Interestingly, this is the fifth consecutive monday That the Tysons Corner, Virginia-based corporation has announced major acquisitions of the market-leading cryptocurrency, demonstrating confidence in BTC’s prospects and price appreciation.
Microstrategy’s Bitcoin Stash Overtakes Nvidia
According to a presentation With the US Securities and Exchange Commission (SEC), MicroStrategy purchased 21,550 Bitcoin tokens between December 2 and 8 at an average price of $98,783 per token.
Over the past four years, Saylor and his company have accumulated more than $41 billion worth of Bitcoin, a move he undertook to change the software company’s survival strategy.
Saylor said in October that he would finance $42 billion over three years through a combination of sales of shares in the market and convertible debt offerings, bolstering the company’s BTC acquisition strategy.
The pace at which MicroStrategy is accumulating Bitcoin has accelerated substantially in the month since Donald Trump’s election on November 5; It took him almost a year to accumulate his first 100,000 coins, but only two weeks to grow his holdings from 300,000 to 400,000.
This vast stash of Bitcoin is now worth more than the cash reserves of computer giant Nvidia Corp., as well as almost all non-financial corporations listed in the S&P 500 index.
Liquidity and credit concerns
Despite BTC’s bullish outlook, researchers believe MicroStrategy’s method is not without risks. In four of the last five weeks, the company bought Bitcoin at an average price higher than average market priceraising questions about the long-term viability of the approach.
Shares of the company, MSTR, have risen more than 500% this year, generating significant interest from investors, while hedge funds have begun purchasing its notes for market-neutral arbitrage methods, capitalizing on the Bitcoin volatility. However, analysts warn that continuing to rely on Bitcoin could be risky.
Min Jung, research analyst at Presto Research, noted that while rising BTC prices create a positive feedback loop (in which higher stock prices allow for greater fundraising for future Bitcoin purchases) , this cycle largely depends on the rise of the cryptocurrency. “If the market changes, the consequences could be serious,” Jung said. said Bloomberg.
A significant drop in Bitcoin’s market value could jeopardize the company’s financial viability, raising liquidity and credit concerns. Outside of its core business analytics software market, the company’s revenue-generating opportunities would be restricted.
Gracy Chen, CEO of cryptocurrency exchange Bitget, expressed these fears, noting that a drop in Bitcoin prices could jeopardize MicroStrategy’s ability to manage its rise. debt levels.
“The company’s huge BTC holdings pose a risk of market concentration,” Chen explained. “A large-scale liquidation could cause significant price fluctuations, affecting not only Bitcoin but the broader cryptocurrency ecosystem.”
At the time of writing, BTC is trading at $97,700, down 3% in the last 24 hours.
Featured image of DALL-E, chart from TradingView.com
Fountain: NewsBTC.com
