Does Bitcoin’s Biggest Bull Have Cold Feet?


Key points to remember

  • MicroStrategy acquired an additional 301 Bitcoins at a purchase price of approximately $6 million, bringing its total holdings to approximately 130,000 Bitcoins.
  • The latest buy is significantly lower than previous Bitcoin bets from MicroStrategy.
  • The macroeconomic climate and concerns over its underwater position in Bitcoin may explain why MicroStrategy opted for a relatively small purchase.

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The MicroStrategy co-founder announced that the company purchased another 301 Bitcoins for around $6 million earlier today.

MicroStrategy buys more Bitcoin

Michael Saylor is hoarding more of his favorite digital asset, but his latest investment falls short of his previous purchases.

The co-founder of MicroStrategy caught on Twitter Tuesday, announcing that the company had purchased an additional 301 Bitcoin for approximately $6 million at an average cost of $19,851 per coin. The most recent purchase brings MicroStrategy’s total crypto holdings to around 130,000 Bitcoin, worth nearly $4 billion.

Since August 2020, MicroStrategy has invested aggressively in Bitcoin under the supervision of its then CEO, Michael Saylor. After an initial $250 million purchase of Bitcoin, the company has repeatedly doubled its investment as the top cryptocurrency soared to new heights throughout 2021. Despite buying the top cryptocurrency at a range of different prices, the company is currently underwater on its Bitcoin. MicroStrategy’s average purchase price currently sits at $30,639 per coin, while Bitcoin is trading at around $19,121 at press time.

Although MicroStrategy started out as a business intelligence and mobile software company, it has become best known for its bullish outlook on digital assets, particularly Bitcoin. As such, many investors view the company’s stock as an easy-to-trade proxy for the major cryptocurrency.

MicroStrategy’s most recent purchase shows that the company is still interested in buying more Bitcoin at a price below its cost base. However, there are several signs that the Bitcoin bull may be losing its appetite for the leading digital asset in the current economic climate.

Why is the firm slowing down its purchases?

Today’s purchase is significantly lower than Michael Saylor’s previous Bitcoin purchases for MicroStrategy. From February 15 to April 5, the company purchased over 4,000 bitcoins for $190 million. MicroStrategy also spent an additional $25 million in January and another $94.2 million on the leading cryptocurrency in December 2021. However, now that the crypto market is at its lowest level in over 18 months, Saylor appears to be losing less money than he did when Bitcoin was trading significantly higher.

Recent revelations from MicroStrategy also suggest that the company is not short on cash. Earlier this month, MicroStrategy filed with the SEC to sell up to $500 million of its MSTR stock to fund “general corporate purposes, including the acquisition of Bitcoin.” It is possible that the additional funds raised through the stock offering have not been cleared in the company’s accounts. However, given Saylor’s enthusiastic attitude towards buying Bitcoin, it is unusual for him to announce that he only bought a modest amount rather than waiting to reveal a larger purchase like it did so from February to April.

Additionally, Saylor’s relegation from his position as CEO of MicroStrategy could be indicative of internal attitudes toward his Bitcoin acquisition strategy. In August, Phong Le, the former president of MicroStrategy who had successfully managed the company’s software business, succeeded Saylor as CEO.

The decision to replace Saylor with someone more focused on MicroStrategy’s original mandate could act as a hedge against his Bitcoin bet failing. Although Saylor is still spearheading the company’s acquisition of Bitcoin from his position as executive chairman, the recent smaller purchase might be all the company is willing to let him allocate in the current economic climate. It should also be noted that the company recorded a monumental paper loss of $1.5 billion on its Bitcoin holdings. Regardless of Bitcoin eventually recovering above MicroStrategy’s cost base, the pressure of being underwater on such a large bet will no doubt be cause for concern for the company’s top brass.

It remains to be seen if MicroStrategy’s recent $6 million Bitcoin purchase is all the company wants to allocate or if a larger purchase is on the way. Yet, with the global macro backdrop showing little improvement in the short term, Saylor may still have plenty of time to continue buying his favorite asset at depressed prices.

Disclosure: At the time of writing this article, the author owned ETH, BTC, and several other cryptocurrencies.

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