MicroStrategy expands Bitcoin holdings with an additional $786m

MicroStrategy expands Bitcoin holdings with an additional $786mMichael Saylor, the Chairman of MicroStrategy [Getty Images]

In this post:

  • MicroStrategy has purchased an additional 11,931 BTC for $786 million, leveraging convertible notes and surplus cash.
  • With this acquisition, the company now holds 226,331 BTC, valued at approximately $8.33 billion, acquired at an average price of $36,798 per Bitcoin.
  • Recent market trends show significant Bitcoin outflows from ETFs and unwinding of basis arbitrage trades, affecting overall market dynamics.

MicroStrategy has just ramped up its Bitcoin cache, snagging an extra 11,931 BTC for a whopping $786 million. This latest acquisition, funded through convertible notes and a bit of spare cash, came at an average cost of about $65,883 per Bitcoin.

Source: MicroStrategy

As things stand on June 20, the company boasts a staggering 226,331 BTC in its vaults, having invested roughly $8.33 billion at an average price of $36,798 per coin.

MicroStrategy surpasses Bitcoin

Wall Street wealth manager Bernstein recently kicked off its coverage of MicroStrategy with a resounding outperform rating and a target price of $2,890 per share. That’s a tidy 80% rise from its last close at $1,483.88, marking a huge uptrend as the stock itself has already surged by 135% since the beginning of the year.

To put that in perspective, Bitcoin has risen by 57% over the same timeframe. According to Gautam Chhugani of Bernstein, since transforming from a modest software venture to a Bitcoin heavyweight in August of 2020, MicroStrategy has owned up to 1.1% of the global Bitcoin supply, now valued at around $14.5 billion.

Source: TradingView

The company’s founder, Michael Saylor, has intertwined his identity so closely with Bitcoin that it has transformed MicroStrategy into a magnet for large-scale investment, both in debt and equity, fueling its aggressive Bitcoin buying strategy.

Related: MicroStrategy surpasses Amazon in trading volume

Chhugani points out that over the last four years, MicroStrategy’s proactive investment approach has increased the Bitcoin per equity share and quadrupled the Bitcoin dollar NAV per share. This growth rate outpaces the Bitcoin spot price growth, which has approximately doubled in the same period.

Bitcoin ETFs drag markets down

Jag Kooner, the Head of Derivatives at Bitfinex, shed some light on recent market dynamics that MicroStrategy might be capitalizing on. Last week, the cryptocurrency market saw a break from a 20-day streak of inflows, switching to outflows in the past three trading days. Over $550 million flowed out last week and $146 million on the first day of this trading week.

Related: Texas police officer stops $40K Bitcoin scam

In an email to Cryptopolitan, Kooner says these outflows are primarily driven by two factors. First, a lack of conviction among ETF investors leading them to sell below their cost basis, which often exacerbates market volatility. For instance, net inflows peaked in late April with over $1 billion when Bitcoin prices soared above $70,000. However, a sharp reversal occurred as prices dipped towards $60,000.

Second, the unwinding of the basis arbitrage trade has also contributed. As CME futures for Bitcoin saw a decline in open interest by $1.2 billion over the past 10 days, it signals that negative funding rates are prompting investors to pull back from previously lucrative arbitrage opportunities.

Jai Hamid

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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