20.06.2024

MicroStrategy bought bitcoins for another $ 10 million, but the company’s shares are plummeting

MicroStrategy, now the largest Bitcoin holding company, has completed another round of cryptocurrency purchases worth about $ 10 million.

MicroStrategy CEO Michael Saylor announced that the company acquired 205 BTC at an average price of $ 48,888, spending $ 10 million in cash. Thus, the total volume of bitcoins managed by the company is 91,064 BTC worth $ 4.3 billion . Despite the success in investing, MicroStrategy shares began to fall sharply in the second half of February.

In addition, the crypto market no longer reacts so violently to such news.

Recall that the activity of MicroStrategy became known in August 2020. It was then that the representatives of the company announced the purchase of 21,454 BTC. In addition, they noted that Bitcoin has more impressive long-term growth potential than cash, which means that the transfer of funds to cryptocurrencies was more than justified for them.

A few months later, representatives clarified their approach to investing in BTC. According to them, this is not about the desire to make money, and also not about speculation or risk reduction. The point of investment comes down to the adoption of a new financial standard, which Bitcoin will become. In this regard, the management is ready to keep their cryptocurrency savings for at least a hundred years.

Who Buys Bitcoin?

Note that the investment of 10 million does not look too large, even by the standards of some individual investors in the cryptocurrency industry. Earlier MicroStrategy made much more impressive investments, reports Cointelegraph. For example, the day before, it issued $ 900 million in debt bonds for investments in the main cryptocurrency at an average price of $ 52,700 per coin.

That being said, it is important to note that the company is currently replenishing its cryptocurrency reserves during the industry decline, when less experienced investors panic and get rid of assets out of emotion. Therefore, given the current market conditions, even an investment of a relatively small amount will play an important role in the future, when the asset goes up.

And although this move seems to be the right one in terms of investments, MSTR’s stock price clearly disagrees. Their price peaked at around $ 1,300 in February, but within a couple of weeks the value of the company’s securities dropped to a local minimum of $ 628. This is a decrease of almost 50 percent – and in a rather short period of time, as for the stock market.

falling cryptocurrency market

Change in MSTR share price in the last six months

The performance of MicroStrategy shares appears to have been influenced by the recent correction in Bitcoin, which still has not been able to gain a foothold above the $ 50K line . According to the former CEO of the BitMEX cryptocurrency exchange Arthur Hayes, in the most pessimistic scenario, BTC could continue a rapid collapse due to the poor macroeconomic environment. The reason is a sharp increase in lending rates by the US Federal Reserve System, which will lead to a large outflow of capital from the cryptocurrency market.

At the same time, some analysts believe that the phase of the market subsidence is almost over. Well, after the current consolidation – that is, the opening of a sufficient number of long positions by investors – the niche will move into growth, with an emphasis on altcoins. Which of these versions will justify themselves will become known after some time.

falling cryptocurrency market

MSTR Stock Price Chart Against Bitcoin Price Background

By the way, Tesla shares, which invested $ 1.5 billion in Bitcoin, show similar activity. The share price chart for half a year looks like this.

tesla stock rate

Change in TSLA share price over the past six months

We checked the latest data: today Bitcoin started the day at $ 48,961, which is 2.7 percent higher than a day ago. The cryptocurrency capitalization is $ 912 billion, and the daily trading volume is 50 billion. Here is a graph of the cryptocurrency rate for the last month.

bitcoin price chart

Bitcoin price chart for a month

We believe that the situation with shares of companies that owns Bitcoin is explained, among other things, by the state of the cryptocurrency market, which is in decline. When BTC returns to growth, many novice investors will again believe in MicroStrategy’s solution and will want to buy their shares. Still, the company is the largest holder of a cryptocurrency of its kind, which means it has to be reckoned with.

Therefore, now investors should wait for the end of the Bitcoin correction. Let us remind you that this is a normal situation during the market growth, which happened several times during 2017. This means that it is too early to put an end to cryptocurrencies and their potential.

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