Recently, Michael Saylor’s investment in Bitcoin through MicroStrategy reached a current value with an unrealized profit of $745 million. But how did the price of BTC affect Microstrategy’s investment? Let’s look at all the details below.
How did the price of Bitcoin impact Microstrategy’s investment?
MicroStrategy‘s (MSTR) positions in Bitcoin (BTC) turned positive when prices reached $31,000 Monday morning.
By the end of 2022, the company had suffered deep losses, with Bitcoin having plummeted nearly 80% from its November 2021 peak.
However, thanks to factors such as a spot ETF and the upcoming halving event, the situation has greatly improved, leading to a near doubling of the price this year.
Michael Saylor, former CEO of MicroStrategy and current executive chairman, has become one of Bitcoin’s most fervent supporters over the years and has remained a prolific buyer.
To date, his company has made only one sale: 708 Bitcoin in December 2022, with a value of $11 million at the time.
The company’s most recent acquisitions were made in the weeks leading up to 24 September of this year, when 5,445 Bitcoin were added for slightly less than $150 million, with an average price of $27,053 each.
This brought MicroStrategy’s positions to 158,245 Bitcoin acquired at an aggregate cost of about $4.68 billion, with an average price of $29,582 each.
At the current price of $30,650, the Bitcoin investment earned about $1,000 per coin, for a total gain of about $160 million.
The company’s 158,245 Bitcoin positions exceed those of the nearest institutional holder by nearly fourteen times, according to Bitcoin Treasuries data.
MicroStrategy could further increase its acquisitions. The company announced in August that it could raise up to $750 million by selling additional shares, with plans to use some of the proceeds to purchase additional Bitcoin.
Bitcoin surpasses $31,000: MicroStrategy and the optimism of the crypto market
Recently, Bitcoin crossed the $31,000 mark, an achievement not seen since the summer of July. This success is not only a figure, but also symbolizes the growing confidence in the imminent approval of a spot Bitcoin exchange-traded fund (ETF).
At the moment, Bitcoin’s price is around $31,300, demonstrating its individual strength and pushing the global cryptocurrency market capitalization up 3.7% to a whopping $1.22 trillion.
Analysts attribute this rally to several positive signs, including a -11% drop in GBTC’s discount, reflecting a growing consensus on the imminent approval of a spot Bitcoin ETF in the first quarter of next year.
This catalyst could lead to large capital inflows. In addition, Bitcoin’s detachment from other cryptocurrencies has been noted, especially in view of the imminent approval of the spot ETF.
Indeed, Michael Dunn of Bitnomial Exchange, stated the following in this regard:
“We are seeing a separation of Bitcoin from other cryptocurrencies due to its role as digital gold and the market’s expectations of spot ETF approval. Bitcoin’s dominance index, which has been growing since 2022, highlights its superior performance compared to other cryptocurrencies.”
Triumph in Bitcoin investment and growth prospects
This rally in Bitcoin goes beyond market dynamics: it also reinforces MicroStrategy’s multibillion-dollar investment in Bitcoin. With Bitcoin’s price exceeding $31,000, MicroStrategy’s average purchase price at $29.582 is now in profitable territory.
This win reflects MicroStrategy’s meticulous and aggressive strategy in acquiring Bitcoin, led by co-founder Michael Saylor since 2020. MicroStrategy’s shares have felt the impact of this triumph, rising 160% this year, in sharp contrast to the 74 percent decline in 2022.
This turnaround is a direct result of Bitcoin’s 85% surge this year.
Stephane Ouellette, CEO of FRNT Financial, noted that the success in MicroStrategy’s treasury should be reflected positively in quarterly reports.
Because MicroStrategy’s treasury is largely composed of Bitcoin, the company’s stock is expected to have a stronger quarter, thanks to earnings. In addition, as the company seeks to expand into industry services, it could see greater demand for its offerings.
Bitcoin’s growth is a sign of renewed optimism for stakeholders like MicroStrategy, and as the cryptocurrency giant continues to climb, all eyes remain on how much higher Bitcoin can go.
Source: https://en.cryptonomist.ch/2023/10/24/rise-price-microstrategy-bitcoin-investment/