Michael Saylor’s company (that owns 92 thousand BTC) may soon sell its shares for another $1 billion to buy this cryptocurrency. What if other major players want to follow MicroStrategy’s lead? What might happen if a long-term correction begins? Why is MicroStrategy buying Bitcoin again and again? Is MicroStrategy down? LATOKEN experts want to go into the matter.
A couple of days ago, MicroStrategy announced to the SEC that it could sell up to $1 billion of its shares for additional investment in Bitcoin. The announcement came after the company completed a $500 million bond placement that might also be invested in cryptocurrency.
MicroStrategy still remains the largest publicly traded Bitcoin holder. This company owns 92 thousand bitcoins with a total value of $3,6 billion. The average purchase price is $24,4 thousand.
Experts believe that Michael Saylor makes his main bet on Bitcoin. Like many in the Bitcoin-verse, Saylor refers to cash as “trash” and a “melting ice cube.” Bitcoin, on the other hand, is “digital gold.”
On the positive side, fundraising is quick, and this may indicate that market saturation has not yet occurred.
The most significant purchase of MicroStrategy took place in February when Bitcoin cost about $52 thousand. The company purchased 19,4 thousand BTC for over $1 billion, and the total number of coins exceeded 90 thousand. Funds were also raised through the placement of bonds.
It can be assumed that MicroStrategy has chosen the most profitable strategy. This policy is more like a pre-planned PR action, since thanks to Michael Saylor’s statements, millions of new investors around the world learned about MicroStrategy.
Michael Saylor actively speaks about the prospects of the crypto market and is interviewed by the most prominent American media. For example, in March this year, he predicted that the value of the cryptocurrency could reach $5 million, and its capitalization — $100 trillion.
As we can see, such a policy has been working, and working pretty well. At its peak, the potential earnings of the IT company from BTC investing exceeded $3 billion, and its shares reached a 20-year high above $1,2 thousand. But as a result, the company’s capitalization began to strongly depend on the situation in the crypto market.
On April 14, when Bitcoin reached its all-time high at $64,8 thousand, the value of MicroStrategy shares on the Nasdaq was $735. In the next month and a half, against the background of the crypto market collapse, it decreased by almost 40% to $450. At the closing rate on June 15, quotations were $630. Everyone might conclude that a long-term depreciation of the BTC rate may harm the value of the company’s securities and, possibly, its activity as well.
Some experts believe that the possible failure of Microstrategy is directly related to the potential collapse of the crypto market. There are significant risks, but still, it is not worth giving up on MicroStrategy, even in a negative scenario. So don’t say MicroStrategy is down!
Do not forget that the company has other sources of financing, which should be sufficient to service debt obligations. And in the case of multiple increases in Bitcoin price until the end of 2021, MicroStrategy has a high potential for growth due to the PR effect. Perhaps this is why MicroStrategy is buying Bitcoin.
Despite the example of MicroStrategy, buying BTC by large companies is unlikely to be a new trend. Due to the recent price collapse from $64,8 thousand to $30 thousand, many companies could reconsider their attitude to the risks of buying this cryptocurrency.
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