According to Financial Network on December 26 (Editor: Ma Lan), software provider Microstrategy is increasingly becoming a key player in the Bitcoin market, currently holding Bitcoin valued at approximately $43 billion, accounting for about 2.2% of the total Bitcoin supply.
In a document submitted to the U.S. Securities and Exchange Commission on Monday, Microstrategy hopes to increase the authorized number of Class A common stock and preferred stock to raise more funds to purchase Bitcoin.
This has also pushed the price of Bitcoin to rise on Thursday. As of the time of writing, the price of Bitcoin has rebounded to $98,046, up 0.15% for the day. Other smaller tokens have also seen a recovery, with the broad CMC100 index of cryptocurrencies rising 3% since the beginning of the week.
Sean McNulty, trading director at liquidity provider Arbelos Markets, stated that Microstrategy's announcement of issuing more stocks next year to purchase Bitcoin has driven up the price of Bitcoin. The market holds an optimistic view on Microstrategy's Bitcoin purchasing activities, which is the biggest reason for the market's rise.
Volatility Outlook
Earlier this week, Microstrategy announced that it had purchased an additional $561 million worth of Bitcoin at an average price close to last week's historical high, marking the company's seventh consecutive week of purchasing this token.
Since the beginning of this year, the price of Bitcoin has risen by 135%, surpassing the returns of the vast majority of global stocks and traditional investments like gold. This has also driven Microstrategy's stock price to rise significantly, with an increase of over 420% so far this year.
The company's latest plan is to raise $42 billion to continue accumulating Bitcoin, with $21 billion coming from stock issuance and the other $21 billion from fixed income securities, which the company has referred to as the '21/21 Plan.'
The goal of this plan is quite clear, namely to maximize its Bitcoin holdings using all possible financial leverage, thereby ensuring its pioneering position in the Bitcoin space. However, this ambitious idea has also led some critics to believe it will raise concerns among traditional investors, as the scale and speed of its dilution of equity is clearly not mainstream in the market.
In addition, some traders have warned that due to the large number of open contracts for Bitcoin and Ethereum derivatives set to expire, the market may experience significant volatility on a given day.
Some believe that Friday could be that Schrödinger's moment, when the open contracts on the derivatives exchange Deribit will reach a record $43 billion, including $13.95 billion in Bitcoin options and $3.77 billion in Ethereum options. Analysts are concerned that market makers may unwind their hedges and short Bitcoin on Friday, potentially triggering significant volatility.