According to PANews on December 26, MicroStrategy has once again attracted everyone's attention because they plan to issue more stocks next year to continue their large-scale purchase of Bitcoin. This announcement has undoubtedly fueled the price of Bitcoin!
Sean McNulty, the trading director at Arbelos Markets, also stated: 'The market is very optimistic about MicroStrategy's news of buying Bitcoin, which has driven the market up; it's simply the only reason!' He humorously added, 'Now keeping an eye on MicroStrategy's developments has become part of my daily work.'
Why is MicroStrategy's action so noteworthy?
In simple terms, this company is already one of the largest holders of Bitcoin in the world; buying Bitcoin is their 'core competency.' This time, they even plan to issue more stocks to raise funds to buy more Bitcoin. On December 23, MicroStrategy submitted documents to the U.S. Securities and Exchange Commission (SEC), stating that they intend to increase the number of authorized shares of Class A common stock and preferred stock, which means they will have more funds to continue 'stockpiling Bitcoin.'
However, amidst the enthusiasm for buying Bitcoin, some warning voices have begun to emerge.
This is because there is a huge pile of Bitcoin and Ethereum derivatives' open contracts that are about to expire in the market. When the time comes, the expiration of these contracts may trigger a wave of market volatility, potentially even 'shaking' the entire cryptocurrency market.
Especially this Friday, the Deribit exchange will witness a super 'spectacle' - $4.3 billion worth of open contracts are set to expire, including $13.95 billion in Bitcoin options and $3.77 billion in Ethereum options. This is a historical high!
Therefore, McNulty cautioned: 'Market makers may unwind hedges or even start shorting Bitcoin, which could make the market even more volatile this Friday.'
MicroStrategy's announcement has undoubtedly injected a boost into the rising momentum of Bitcoin, with investors' optimism driving the market upward. However, behind the market's 'high-flying' performance, there are potential volatility risks lurking. As the expiration of derivative contracts approaches, the market may undergo a reshuffle, and there could even be short-term drastic fluctuations.
In summary, the new year could present a major opportunity for Bitcoin, but it could also pose a significant challenge. Investors need to remain vigilant, manage risks diligently, and not be caught off guard by sudden volatility!
