MicroStrategy’s Bold Move in the Cryptocurrency Market: A 2024 Overview
MicroStrategy Inc. (NASDAQ: MSTR) has emerged as a major player benefiting from the cryptocurrency boom of 2024. The company’s strategic investments in Bitcoin (BTC) have resulted in a dramatic increase in its stock value. Year-to-date (YTD), MicroStrategy’s share price has surged by an impressive 384.87%, reaching $332.23 at the time of writing.
Potential Threats to MicroStrategy Stock
However, as of December 24, 2024, the company faces significant risks that could lead to a sharp decline in its stock value. A critical factor contributing to this potential downturn is an internal strategic decision by MicroStrategy.
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A recent filing with the Securities and Exchange Commission (SEC), specifically a Schedule 14A document, disclosed that CEO Michael Saylor is seeking shareholder approval to increase the number of MSTR shares by roughly 11 billion.
Will MicroStrategy’s Bitcoin Strategy Backfire?
To date, MicroStrategy’s efforts to raise capital for further Bitcoin acquisitions have received positive feedback from investors. However, the proposed plan to increase the common shares by 10 billion and preferred equity by 1 billion could lead to significant equity dilution, representing a thirtyfold increase in the number of shares.
If the ambitious “21/21 plan”—aiming to raise $42 billion through equity and fixed-income assets for more Bitcoin purchases—is executed, it could drive MSTR stock prices below $100. While this outcome might seem alarming, it might not necessarily be harmful, given the potential for Bitcoin to rally further.
The impact of this plan on MicroStrategy will ultimately depend on Bitcoin’s performance and the duration of the current cryptocurrency bull cycle. As of December 24, Bitcoin has faced significant resistance, retreating from its all-time high of over $108,000 to a still-strong $94,000 within a week.
MicroStrategy Doubles Down on Bitcoin
This scenario could present an ideal opportunity for MicroStrategy and other investors to capitalize on potential dips, especially if the lofty Bitcoin price targets of $250,000, $350,000, and $800,000 for 2025 are realized.
Nevertheless, the volatile nature of digital assets means that additional investments carry substantial risk, with the specter of another ‘crypto winter’ always looming.
As 2024 nears its conclusion, it is unmistakably clear that Michael Saylor and MicroStrategy have committed wholeheartedly to Bitcoin. In late November, the company made its largest Bitcoin purchase ever, amounting to $5.4 billion.
In recent months, MicroStrategy has acquired over 200,000 BTC and, according to current data, holds more than 400,000 Bitcoins. This accounts for approximately 2.11% of the total Bitcoin supply, both mined and unmined.
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