One of the most notable differences between the current crypto rally and previous ones is that this time around, some of the biggest corporations in the world have backed crypto, which has helped create confidence in the market. Leading banks such as JPMorgan and Goldman Sachs are looking at crypto investment options and vehicles to offer to their customers and clients, while the likes of PayPal have begun allowing users to make crypto transactions on their platforms. MicroStrategy, the business analytics firm, has also risen to prominence as the company that owns more Bitcoin than any other in the world, and it has now spent even more money to buy more tokens, taking advantage of the dip in Bitcoin’s price.
MicroStrategy has reportedly invested $489 million into Bitcoin recently, buying around 13,005 tokens at an average price of roughly $37,617. With this investment, the company now owns about 105,085 bitcoins, worth around $3.6 billion at current prices. Helmed by billionaire bitcoin bull Michael Saylor, the firm has so far spent more than $2.7 billion buying bitcoin at an average price of $26,080, which is around 25% below the current market price. MicroStrategy’s bitcoin commitment has helped the company’s stock reverse a decades-long lull that started when the dot-com bubble crashed in March 2000. Despite at one point crashing more than 99% from its tech-bubble high in 2000, the stock has skyrocketed more than 300% since Saylor announced the company’s first bitcoin purchase in August. However, shares tend to ride bitcoin’s incredibly volatile price wave. In a filing earlier this month, MicroStrategy said it expects to incur an impairment loss of at least $284.5 million in the second quarter “based on the fluctuations in the market price of bitcoin.” Now down nearly 80% from their dot-com era peak, shares have plunged more than 50% since February, when bitcoin sank after Tesla CEO Elon Musk said prices seemed “a little high.” The cryptocurrency is down about 40% over the same period, but like MicroStrategy, its prices are up more than 300% over the past year. MicroStrategy owns more bitcoin than any publicly traded company, but less than investment manager Grayscale, which owns 654,885 tokens in its namesake bitcoin fund—worth more than $24 billion.
It funded this recent investment through a debt offering, and in a sign of massive interest from institutional investors, MicroStrategy reportedly received more than $1.5 billion in orders for the offering, which was announced two weeks ago while bitcoin prices were at a one-month low of about $33,400. An example of how the company’s stock price has begun to mirror the movements in Bitcoin can be seen in the fact that it was down 9.7% on 21st June, right after this announcement, which was also roughly the drop in Bitcoin’s price on the same day.
This strategy has helped the company go from obscurity on Wall Street to a well-known force in the crypto community, and has also been pushed further by Saylor’s comments and statements supporting the company’s strategy. He routinely touts Bitcoin on Twitter as well, and has picked up more than a million followers as a result. According to a recent appearance by Saylor on CNBC, the company has become one that can sell enterprise software and buy and hold Bitcoin, and have successfully used leverage to do so, as the recent debt offering has shown. The brand value has skyrocketed as well, with the recent quarter being one of the best in the last 10 years, and total revenue was also up by 10% last year. It seems as though MicroStrategy’s focus on bitcoin is keeping shareholders happy, which is the key reason behind its stock performance.
MicroStrategy’s stock has soared since the company announced its maiden bitcoin buy before the bell Aug. 11. The shares have risen around 423% from its Aug. 10 close, and it hit a 52-week high on Feb. 9, trading above $1,300 per share, which was its highest level since the dot-com boom.
This example shows how there is still a thriving market for crypto investments, and the ongoing dip is actually turning into an opportunity for long-term investors to buy more crypto in anticipation of a long-term rally in the market.