MicroStrategy Doubles Down on BTC After $146.6m Loss in Q4 2021
Microstrategy has announced that they have added 660 BTC to their Bitcoin holdings. The business-intelligence software company has continued to accumulate the cryptocurrency, with its total holdings now standing at 125,051 BTC.
Consequently, with its latest purchase, the company currently holds 0.5% of the total supply of Bitcoin in circulation, which at the current market price of $38,488 is worth over $4.8 billion. While the company had to write down $146.6m in the last quarter, it seems more confident than ever in its Bitcoin strategy.
Micheal Saylor, Microstrategy’s CEO and Bitcoin advocate recently urged Apple to add Bitcoin to its balance sheet, tweeted about the latest acquisition stating “As of 1/31/22 we #hodl ~125,051 bitcoins”.
Microstrategy Bought the Dip As Bitcoin’s Price Corrected
With the latest acquisition, Microstrategy seems to be playing the long game regarding digital assets. The company has made a profit of roughly $1 billion on their previous $3.78 billion worth of Bitcoin purchases.
Microstrategy has bought practically every Bitcoin dip, with an average buy price of $30,200/BTC. This further reaffirms its CEO’s strategy of buying every Bitcoin cycle’s tops and bottoms with a long-term view in mind. He reiterated this outlook in a recent interview when questioned about his purchase of the digital asset.
The 660 BTC acquired throughout the last 32 days starting from December 30, 2021, is equivalent to an average of 21 BTC per day. This number is lower than the 1,914 purchased in the preceding 20 days– 96 BTC per day. These two purchases further pale compared to the 1,434 Bitcoins purchased in the first nine days of December.
The drop in purchase indicates a possible risk-averse approach in the company’s Bitcoin acquisitions following the fall in BTC price. The world’s largest cryptocurrency by market capitalization achieved a record high price near $69,000 in November and is now trading at $39,000.
The current crypto market capitulation has seen several institutional bodies seize the opportunity to buy the dip, just like MicroStrategy. El Salvador’s president Nayib Bukele, a vocal Bitcoin proponent, announced via Twitter that his country had also brought 410 Bitcoins for $15 million.
Despite several companies holding BTC recording losses to varying degrees because of the current slump in prices, institutional investments have continued to grow. The market situation has provided a good entry point for investors who believe crypto should be held in company portfolios.
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Microstrategy’s Stock Price Mirrors BTC
Microstrategy stock has been declining for some time, mirroring the price decline of Bitcoin. Since the start of the year, its share price has continued to plummet, with its fall rate so far being 32%. However, the decline has been even more pronounced over the last three months, standing at more than 50%.
Following the meme stock craze in February last year, Microstrategy’s stock price peaked at $1,315. Since then, it plummeted to $450 before surging slightly to around $900 in late November. After the last increase in price, the overall trend has been downward. However, following its latest Bitcoin purchase announcement, its share price went up by 5.8% to $389.50.
Meanwhile, analysts continue to be upbeat about the stock price. The consensus 12-month target price of $742 is a tremendous 101.6% premium from the day close. Also, short interest increased by 5.6% over the recent reporting period, with the 1.70 million shares sold short, accounting for 20.3% of MSTR’s available float.
Overall, MicroStrategy’s equity Schaeffer’s Volatility Scorecard (SVS) of 88 out of 100 means it exceeded options traders’ volatility expectations last year.
Do you think Microstrategy’s share price will continue to mirror Bitcoins’ price even as the company continues to buy the digital asset? Let us know your thoughts in the comments below.
