According to Finbold, MicroStrategy (NASDAQ: MSTR) has recently expanded its Bitcoin (BTC) holdings by purchasing an additional 27,200 BTC for approximately $2.03 billion, bringing its total to 279,420 BTC. This move aligns with the company's strategy to transform into a Bitcoin bank, offering various financial products. However, independent analyst Gert van Lagen has raised concerns about the sustainability of this approach, particularly in the event of a recession. Lagen suggests that an economic downturn could force MicroStrategy to sell its Bitcoin holdings, potentially impacting both the company and the broader cryptocurrency market. He warns that holding such a large amount of Bitcoin is unsustainable for a company of MicroStrategy's size and could lead to liquidation if economic conditions worsen.
The company's aggressive Bitcoin acquisition strategy has been financed through convertible notes and significant debt, drawing both admiration and criticism. Economist Peter Schiff, a known Bitcoin skeptic, has criticized MicroStrategy's approach, highlighting the risks associated with its cyclical strategy. Schiff argues that the company's reliance on borrowing and issuing shares to purchase more Bitcoin could lead to a collapse if Bitcoin's value declines, preventing MicroStrategy from meeting its financial obligations. Despite these concerns, MicroStrategy's executive chairman Michael Saylor defends the strategy, citing a BTC yield of 26.4% or 157.5 BTC per day, achieved without operational costs.
MicroStrategy's stock has surged alongside Bitcoin's rally to a record high of approximately $90,000, with the company's shares valued at $348, reflecting a 0.6% increase in the past 24 hours and a 31% rise over the past week. Year-to-date, MicroStrategy has outperformed the S&P 500 index, with gains of 408%, sparking discussions on whether other S&P 500 companies should adopt a similar Bitcoin strategy. Notably, some investors, including billionaire George Soros, missed out on the momentum after selling their holdings in the company earlier. The situation underscores the potential volatility and risks associated with MicroStrategy's Bitcoin-centric approach, as well as the broader implications for the cryptocurrency market and traditional financial sectors.
