MicroStrategy adds $5.4 billion to buy Bitcoin.
The publicly traded company holding the most Bitcoin globally has made another move! According to (CoinDesk), U.S. listed company MicroStrategy continues its bold cryptocurrency investment strategy and made another substantial purchase of Bitcoin on November 25.
In the past week, MicroStrategy spent $5.4 billion to purchase 55,500 Bitcoin at an average price of $97,862, bringing the total holdings to 386,700 coins, with a total value of nearly $38 billion, further solidifying its status as a Bitcoin corporate giant.
Source: MicroStrategy official website. MicroStrategy adds $5.4 billion to buy Bitcoin, with an average price of $97,862, bringing the total holdings to 386,700 coins.
Although MicroStrategy has again announced buy, buy, buy, Bitcoin briefly fell below $93,000 early this morning, but this seems to have not shaken MicroStrategy's investment confidence.
Since launching its Bitcoin investment strategy in 2020, MicroStrategy has become a significant player in the cryptocurrency market.
This year, MicroStrategy's stock price has skyrocketed by 515%, attracting the attention of a large number of investors. The company's market value once exceeded $100 billion, making it the first time it entered the list of the top 100 publicly traded companies in the U.S.
MicroStrategy is currently awaiting the results of the Nasdaq index annual re-ranking on December 13, which may further enhance its market position.
Further Reading:
Stock price up 100% this month! MicroStrategy's Bitcoin strategy is super effective, and its market value is expected to outperform Intel?
MicroStrategy founder: Shareholders can earn millions every day.
MicroStrategy founder Michael Saylor is quite confident in the Bitcoin strategy. He stated yesterday that the company's funding operations have yielded a 59.3% return for shareholders, equivalent to a net gain of 112,215 Bitcoin, or about 314 Bitcoin per day.
Saylor further estimates that if Bitcoin rises to $100,000, it would mean shareholders can earn about $34.1 million in floating income daily.
Source: saylor/X. MicroStrategy founder: The company earns shareholders millions every day.
Behind this aggressive investment strategy is a strong belief in the long-term appreciation of Bitcoin.
Saylor believes that compared to traditional currencies and other investment tools, Bitcoin offers better preservation and appreciation potential. MicroStrategy recently completed a $3 billion zero-coupon convertible bond issuance, with a conversion price of about $672.40, further confirming the company's optimistic outlook for the future.
Are MicroStrategy's zero-coupon convertible bonds risky?
(Cointelegraph) Senior analyst Marcel Pechman points out that MicroStrategy's method of raising funds through issuing zero-coupon convertible bonds provides investors with an indirect opportunity to participate in the Bitcoin market.
Pechman explains that when investors buy these zero-coupon convertible bonds, they do not receive regular interest but can convert the bonds into company stock at a premium price when MicroStrategy's stock price rises, linking bondholders' returns closely to the company's stock price and Bitcoin value.
Source: Finance Institute. Basic knowledge of convertible bonds.
However, this strategy also carries significant risks. If Bitcoin suddenly drops sharply, MicroStrategy may face liquidity issues and ultimately be forced to sell Bitcoin at an unfavorable price to meet its debt obligations.
Currently, MicroStrategy's stock price is 3.3 times the book value of its Bitcoin holdings, reflecting investors' optimistic expectations for Bitcoin's future appreciation.
Pechman points out that MicroStrategy's weighted average debt repayment period exceeds five years, providing a certain buffer period for debt repayment.
If Bitcoin continues to rise, MicroStrategy still has the opportunity to avoid shareholder dilution by repurchasing bonds, providing higher returns for investors.
However, if Bitcoin experiences significant volatility, bondholders may give up converting to stock due to poor stock performance, which could put additional financial pressure on MicroStrategy.
Pechman believes that MicroStrategy provides investors with a leveraged exposure tool to Bitcoin, amplifying its volatility risk. Therefore, direct investment in Bitcoin may offer simpler exposure and relatively lower risk.
Further Reading:
Following MicroStrategy! How long can the 'Bitcoin hoarding frenzy' in U.S. stocks last? Will it become a bubble?
'Is there no limit to Bitcoin buying? MicroStrategy adds $5.4 billion, earning shareholders millions every day.' This article was first published on 'Crypto City.'
