MicroStrategy's Latest Bitcoin Buy Underscores Unprecedented Commitment

Credit: Photo by Executium on Unsplash

By Landon Manning

Continuing a long trend of investing heavily in bitcoin as a treasury reserve asset, business intelligence firm MicroStrategy has bought the dip, putting an additional $400 million into BTC that it plans to hold for the foreseeable future.

This purchase came through on November 29, after bitcoin's price dropped from its highest-ever valuation in mid-November; at the time of the buy, bitcoin's price was around the $57,000 mark. According to official documentation of the purchase maintained by the U.S. Securities and Exchange Commission (SEC), MicroStrategy went slightly over this price, at an average cost of $59,187 per bitcoin, although this figure also includes various fees and expenses associated with large-scale transfers. This left the aggregate average price that MicroStrategy has spent on all its bitcoin at under $30,000.

MicroStrategy has been buying dips since August 2020, when it followed up on promises made at a Q2 2020 shareholders meeting by purchasing 20,000 bitcoin at prices now considered by many to be a pittance. With these first coins acquired before bitcoin’s massive and extended runaway over the course of 2021, it is important to note that this first acquisition, at prices less than one-fifth of bitcoin’s current valuation, still only make up 20,000 of the 120,000 BTC that MicroStrategy now holds in its own private custody.

With the company now holding a little more than half of 1% of all bitcoin that will ever be in existence, the vast majority of these purchases have been made confidently in the climate of constant price jumps.

MicroStrategy has been steadily putting huge amounts of money into cryptocurrency throughout the year, starting with $400 million in February and ballooning to $3 billion by August. Since adopting this strategy, a process which began with CEO Michael Saylor disclosing his own personal holdings to his firm’s shareholders, MicroStrategy’s stock valuation has gone up immensely, Bloomberg noted.

Although the month-by-month losses that the firm experiences have undoubtedly increased, the rising stock price of MicroStrategy is only one part of the equation — some $3 billion in unrealized gains could be cashed in. Of course, since Saylor has himself claimed via Twitter that “you do not sell your bitcoin,” these gains may be left to further accumulate value for the foreseeable future.

From here, it is difficult to predict what will happen to bitcoin’s price in the near future — all previous high-water marks have taken place in the context of substantial spikes, coming in quickly and dropping almost as quickly. However, the price of bitcoin has become relatively stable recently, without losing anywhere near the same value that has typically accompanied its drawdowns.

With so many uncertain factors in the world economy, with another coronavirus variant whose outbreak has heralded both rising and falling for bitcoin, no one can say how soon MicroStrategy’s bet will pay off. However, Saylor has shown that he and his team are committed to a maximalist vision, and it’s been paying off very well so far.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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