MicroStrategy’s latest Bitcoin purchase puts Saylor ahead of the curve

• Bitcoin’s price moved past $38,000 after the software firm revealed details of its recent purchase.
• BTC has the potential to retrace in the short term, the MVRV ratio indicated.

The aftermath of MicroStrategy’s recent Bitcoin [BTC] purchase has left bears wondering if times have changed. This is because the Bitcoin price did not nosedive as many would have expected. However, BTC jumped and was able to reclaim $38,000.

Led by executive chairman and Bitcoin maximalist Michael Saylor, MicroStrategy confirmed that it purchased an additional 16,130 BTC. The company, in its communiqué on 30th November, noted that it now holds a total of 174,530 BTC.

At press time price, the value of the new purchase was worth around $611 million. This makes the recent purchase the highest MicroStrategy has bought in about two years. 

Although the Business Intelligence (BI) firm mentioned that these coins were bought in November, it seems that the once-criticized Bitcoin strategy adopted by the firm is now seen as an impressive decision.

What’s better than one profitable bet? More?

MicroStrategy adopted the Bitcoin standard in August 2020. Its first Bitcoin purchase at that time was 21,454 BTC. At that time, this was worth approximately $250 million.

But after Bitcoin went on a downward spiral in 2022, the assets held by the firm fell into a massive unrealized loss.

Many comments also seemed to tear Saylor into pieces for putting his firm into such a tight position.

However, this year has proven to be a significant one for MicroStrategy. This is because Bitcoin’s recovery has ensured that the company now holds billions of dollars in unrealized profits.

Not only did Bitcoin’s price impact MicroStrategy positively, its stock MSTR has also done the same.  On a Year-To-Date (YTD) basis, BTC has increased by 258.20%. MSTR, on the other hand, has also jumped by 128.78%.

Source: PortfoliosLab

However, AMBCrypto’s analysis of both assets showed that MSTR has been more volatile than BTC at 12.76% to 11.79% respectively. This means that the stock has had higher price fluctuations than Bitcoin in recent times.

It is also important to note that Bitcoin and MSTR are still down from their All-Time High (ATHs). While BTC is down 43.99% from its ATH, MSTR still has a whopping 60.16% to catch up with its previous high. 

Every scenario is not the same

A look at the Market Value to Realized Value (MVRV) ratio showed that participants may need to be careful about buying Bitcoin for the short term. At press time, the MVRV ratio was 1.79, as indicated by Glassnode.

Source: Glassnode

This metric indicates if a cryptocurrency is at fair value or not. Values below 1 mean that most holders are at a loss, and are seen as a buy signal. However, when the MVRV ratio is above 1, it implies profits for holders. 

But at the same time, it preaches caution about accumulating for short-term gains which was the case this time. Furthermore, the MVRV ratio mentioned may not be a valid sell signal considering the current market condition.

Is your portfolio green? Check the BTC Profit Calculator

One reason for this assumption is the optimism around a potential Bitcoin ETF approval. So, it is likely that the Bitcoin price will fail to nosedive in the coming days. 

Many also believe that an approval would shoot up the BTC value. Should this be the case, then MicroStrategy holdings would be worth more than the $6.50 billion it was.