MicroStrategy has once again made headlines by acquiring 5,262 BTC for $561 million, increasing its impressive total cryptocurrency holdings to 444,262 BTC. Simultaneously, there is growing skepticism about the company’s strategy among analysts.
Recent Investments by MicroStrategy
MicroStrategy recently purchased 5,262 BTC for approximately $561 million, bringing its total holdings to 444,262 BTC, accumulated at a total cost of $27.7 billion. The average purchase price was $62,257 per bitcoin. Since the beginning of the quarter, BTC asset yield has been 47.4%, and 73.7% since the start of the year.
Financing Strategy
To sustain its investment strategy, it is believed that MicroStrategy raises capital through issuing convertible and corporate bonds, securing credit lines, and selling shares. The cycle suggests that shares are sold to acquire cryptocurrency, and the rising price increases asset value, enabling further loans for more bitcoin purchases.
Potential Risks for the Company and Market
Some analysts warn that a significant drop in Bitcoin’s price or MicroStrategy’s stock could trigger a cascade effect. If MSTR shares were to fall sharply, it could weaken the collateral backing its loans, potentially leading to forced asset sales, including BTC. This scenario could exert downward pressure on the broader cryptocurrency market, as the company holds 2.2% of the global Bitcoin supply.
Michael Saylor's strategy is seen as a bold attempt to strengthen cryptocurrency’s role in the financial system. However, its risky aspects raise concerns about sustainability, with history reminding us of past stock surges and crashes the company has experienced.
