Despite a significant pullback in cryptocurrencies over the past week, the "bitcoin whale" MicroStrategy is still "buying, buying, buying." The company announced on Monday that it purchased another 5,262 bitcoins, marking its seventh consecutive week of increasing holdings.
According to a filing with the U.S. Securities and Exchange Commission (SEC), the company sold approximately $561 million worth of stock through an ATM (at-the-market offering) and then used the proceeds to increase its bitcoin reserves.
Last week's average purchase price was about $106,613, slightly below bitcoin's historical peak of around $108,500.
MicroStrategy stated in October that it would issue about $42 billion in stock and bonds over the next few years to purchase bitcoin. Since then, the company has increased its holdings by nearly 200,000 bitcoins, raising the average holding cost from $39,266 in October to around $62,257 now.
MicroStrategy currently holds a total of 444,262 bitcoins, with an average purchase price of $62,257. The company is the largest corporate holder of bitcoin in the world.
Risky move
Despite having a massive bitcoin reserve, MicroStrategy is still buying more through leverage. This approach may be risky.
Although MicroStrategy has gained approximately $41 billion in unrealized profits from its bet on bitcoin, the significant drop in the cryptocurrency may pose risks for the company, especially considering its core software business is not consistently profitable, and the company has already raised over $7 billion through convertible bonds.
"Their strategy is to issue convertible bonds and use the proceeds to buy bitcoin. This is essentially leverage trading - borrowing money to buy financial assets," said Steve Sosnick, Chief Strategist at Interactive Brokers.
He also noted that MicroStrategy's approach will be very effective when asset prices move in a favorable direction, but if they move in an unfavorable direction, it could collapse in an unpleasant way.
Sosnick emphasized that MicroStrategy benefits from a "self-fulfilling feedback loop." The company buys bitcoin, which helps drive up the price of bitcoin, and then sells more debt and equity to buy more bitcoin, further pushing up the price of bitcoin.
"These things never last forever, and they often end badly - the question is 'when?' The short-term answer seems to be 'not yet,'" Sosnick said.
Since Trump's election, bitcoin's price has surged nearly 40%, breaking above $108,000 earlier last week, setting a new all-time high. However, pressured by the Fed's hawkish policy outlook, bitcoin just recorded its first weekly decline since Trump's election. It is currently hovering around $94,500. Even a slight adjustment in bitcoin can have a significant impact on MicroStrategy's stock price movement. With bitcoin's recent pullback, in just over a week, MicroStrategy's stock price also plummeted nearly 20%.
However, MicroStrategy's founder Saylor continues to advocate for bitcoin. He stated last week that buying bitcoin is like purchasing land in Manhattan hundreds of years ago and said, "I will keep buying bitcoin. Every day is a good day to buy bitcoin."#比特币走势分析
