MicroStrategy’s Strategic Bitcoin Acquisition: An Analysis
In a significant development, MicroStrategy Inc (NASDAQ: MSTR) has announced yet another strategic acquisition of Bitcoin (BTC) on December 23. This purchase was made at an average price of $106,662, marking a noteworthy decision as it occurs at a value below the dollar-cost average, thus positioning the buy at Bitcoin’s recent peak.
MicroStrategy’s Ongoing Bitcoin Investment Strategy
Despite the fluctuations in Bitcoin’s market price, MicroStrategy maintains a profitable stance with its extensive Bitcoin portfolio. The company’s stock, MSTR, continues to trade at a premium relative to its Bitcoin holdings. Michael Saylor, the CEO, has disclosed that MicroStrategy has amassed a total of 444,262 BTC, with an average acquisition cost of $62,257 per Bitcoin.
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Recent Bitcoin Purchase Details
The latest acquisition involved 5,262 BTC, purchased for $561 million. This marks the company’s smallest disclosed purchase since July 2024. Following this announcement, economist and renowned Bitcoin critic Peter Schiff voiced his skepticism on social media, suggesting a diminishing “firepower” in MicroStrategy’s Bitcoin acquisition strategy.
“It seems like you are running out of firepower to keep propping up Bitcoin. Plus, not only is this your smallest buy, but the first time your average purchase price has been above the market price on the Monday you disclosed the buy.” – Peter Schiff
MicroStrategy’s Historical Buying Patterns
Interestingly, the recent Bitcoin buy is considerably smaller compared to previous acquisitions. For instance, on December 16, the company announced a purchase at $100,000, which was substantially larger. Lookonchain’s analysis highlights that MicroStrategy acquired 5,262, 15,350, and 21,550 BTC on different occasions. Notably, in November, the firm made two significant purchases totaling over 50,000 BTC, demonstrating a more aggressive acquisition strategy during that period.
Insights from Market Analysts
Novacula Occami, a former Wall Street analyst, has critiqued Michael Saylor’s strategy, emphasizing its reliance on two main pillars. According to Occami, Saylor tends to buy when there’s an upward momentum in Bitcoin prices, aiming to capitalize on the positive sentiment among retail traders who are drawn to BTC and MSTR.
Analyzing MSTR Stock and Bitcoin (BTC) Price Movements
Currently, MSTR stock is valued at $344.27, boasting a market capitalization twice that of its Bitcoin holdings. This positions it as a 100% premium investment for those seeking Bitcoin exposure through MicroStrategy. Meanwhile, Bitcoin is trading at $93,113, reflecting a 12% discount from MicroStrategy’s most recent average acquisition price.
Market Reactions and Analyst Critiques
Examining Bitcoin’s price chart reveals that following each MicroStrategy purchase, BTC often experiences a notable decline below the average purchase price. This trend supports analysts’ criticisms of Michael Saylor’s strategy, which is currently facing one of its most prolonged periods of drawback.
Despite these challenges, MicroStrategy’s long-term investment outlook remains robust, with an unrealized profit of nearly $15 billion, underscoring the effectiveness of its high-time frame strategy.
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