Bitcoin Purchase Fuels MicroStrategy’s Balance Sheet
MicroStrategy announced in its filing on Monday that it acquired approximately 55,500 bitcoins from Nov. 18 to Nov. 24, for a total cost of around $5.4 billion. At current prices, this acquisition elevates their bitcoin holdings to roughly 386,700 coins, valued at nearly $37 billion.
Funds for these substantial bitcoin acquisitions stemmed from the recent sales of convertible bonds and newly issued shares. The company had previously invested $4.6 billion in bitcoin acquisitions. This aggressive purchase strategy gained momentum particularly after Donald Trump’s November 5 election win, as investors anticipated a more favorable stance toward cryptocurrency from the incoming administration and Congress.
Investor Concerns and Market Reactions
MicroStrategy’s stock showcased significant volatility, rising in pre-market activity only to decline by nearly 9% when markets opened, before regaining some ground. Despite this downturn, the stock remains up by over 500% year-to-date.
The meteoric rise of MicroStrategy’s shares has sparked apprehension among investors, attracting the attention of short-sellers. Mike Novogratz, CEO of Galaxy Digital, voiced on CNBC that he anticipates a steep correction for stocks tied to bitcoin, such as MicroStrategy, more so than for bitcoin itself. Simultaneously, Citron Research, while bullish on MicroStrategy, declared a short position as a form of hedging, labeling the shares as ‘overheated.’
Initial Market Response to Bitcoin Acquisition
Following the software company’s announcement about its $5.4 billion acquisition of cryptocurrency, MicroStrategy’s shares initially rose pre-market but then reversed to trade lower on Monday.
Update: The narrative has been revised to include MicroStrategy’s latest bitcoin acquisition, fluctuations in share prices, and insights from analysts.