MicroStrategy’s Bitcoin Buying Spree Continues Unabated
The business intelligence firm, MicroStrategy, is set to join the prestigious Nasdaq 100 Index on Monday, and it’s celebrating in style. The company has just announced the purchase of an additional $561 million worth of Bitcoin, bringing its total holdings to a staggering amount.
A Seventh Week of Consistent Buying
This marks the seventh consecutive week of Bitcoin purchases for MicroStrategy, a remarkable feat that showcases the company’s commitment to its cryptocurrency strategy. According to a recent filing with the US Securities and Exchange Commission, MicroStrategy acquired 5,262 Bitcoin tokens at an average price of approximately $106,662 between December 16 and 22.
A Bold Plan to Raise Capital
MicroStrategy’s ambitious plan is to raise a whopping $42 billion in capital over the next three years through a combination of at-the-market stock sales and convertible debt offerings. The goal is to use this capital to buy even more Bitcoin, further solidifying its position as a leading Bitcoin treasury company. With its current pace, MicroStrategy is likely to surpass its capital goals for 2025, prompting co-founder and Chairman Michael Saylor to revisit the plan and set new targets.
Analysts Weigh In
TD Cowen analyst Lance Vitanza, who has a “buy” rating on MicroStrategy’s stock, expressed surprise at the company’s ability to raise capital so quickly. “We haven’t even gotten to 2025 yet, and they’re two-thirds of the way through,” Vitanza noted. “So I think for us it’s a surprise, but it’s less surprising this Monday than it was last Monday or the Monday before.”
Hedge Funds Drive Demand
Hedge funds have been driving some of the demand for MicroStrategy’s stock, using convertible arbitrage strategies to buy the company’s bonds and sell its shares short. This approach allows them to capitalize on the underlying stock’s volatility.
Risks and Challenges Ahead
While MicroStrategy’s strategy has been successful so far, it’s not without risks. The company’s value remains heavily reliant on its Bitcoin holdings, which means a prolonged downturn in the cryptocurrency’s price could pose a significant threat. As Vitanza cautioned, “This model only works if the asset, Bitcoin in this case, not only continues to appreciate, but continues to appreciate considerably faster than alternatives.”
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