MicroStrategy, who have been consistent with buying Bitcoins actively, bought more than 21,550 BTC for $2.1 billion. This is the fifth consecutive Monday that the company has made Bitcoin purchases. Co-founder and CEO Michael Saylor pioneered it four years ago, taking MicroStrategy from a fledgling software company to a large holder of Bitcoin.
The company has acquired Bitcoin for over $ 41 billion at some of the indices. Saylor said in October that Microstrategy had plans to generate as much as $42 billion through the selling of shares and convertible offers within three years.
Rapid accumulation of Bitcoin
Since the start of the year, MicroStrategy has bought 70,421 Bitcoin tokens. In Dec. 2024 alone, the company purchased 21,550 BTC at an average of $98,783 per token, as filed to the SEC. MicroStrategy’s existing portfolio of Bitcoin reserves is higher than that of Nvidia Corp and is among the only seven non-financial S&P 500 Companies.
High-risk investment strategy
MicroStrategy has been buying “digital gold” at a premium to the current market rate for the last five weeks. In the current year alone, the company’s shares have grown more than 500% and attracted investors and hedge funds. But again, the company’s stock is still among some of the most sensitive U.S. markets.
Many analysts advise caution if the rally in Bitcoin is reversed. Recent price fluctuations mean that Bitcoin prices could dip, and investors felt this discomfort as it resulted in MicroStrategy being at the brink of even servicing its expanding debt.
Research analyst Min Jung at Presto Research said that MicroStrategy could have trouble with its strategy. “Higher bitcoin prices lead to even higher stock prices and consequently more buying,” he said. However, he said that this strategy hinges greatly on Bitcoin surging higher from here.
Additionally, Bitget CEO Gracy Chen established concentration dangers as an issue arising from different markets. She said that the massive sale of Bitcoins by MicroStrategy poses a potential threat to the cryptocurrency market.
Future uncertainties
MicroStrategy had disclosed earlier the risks in its regulatory reports. A significant downtrend in the price of Bitcoin is not only disadvantageous to the company’s overall financial health but also suffocates the establishment of cash flow. Currently, Bitcoin is selling at $97,834.35 according to Coinmarketcap.
Based on its current price, Bitcoin has started off the week on a lower note, following its recent rally past $100,000. The recent price movement could be fueled by the decline in long-term holder net positions. This decline has sparked concerns with investors fearing for significant market shifts.
Analyst remarks regarding Bitcoin
Crypto analyst Maartunn has linked the sell-off pressure to events similar events that led to price correction during the last Bitcoin price peak. Despite Microstrategy buying, Maartunn argues that Bitcoin could be in for a bearish rally.
As much as the firm’s strategy is perfect for operations in a bull market, it is still subject to Bitcoin price volatility. Currently, the company has not given its response to increasing demands from analysts and other market observers regarding high-risk strategy.
Related | Binance redefines web3 access with its upgraded wallet relaunch
