Defying all criticism: MicroStrategy adds another $15 million in Bitcoin to reserves
MicroStrategy CEO Michael Saylor has announced that the company has bought another 262 Bitcoin for $15 million. This brings the total holdings to 91,326 BTC with a total value of $2.2 billion.
MicroStrategy has purchased an additional ~262 bitcoins for ~$15.0 million in cash at an average price of ~$57,146 per #bitcoin. As of 3/12/2021, we #hodl ~91,326 bitcoins acquired for ~$2.211 billion at an average price of ~$24,214 per bitcoin. $MSTRhttps://t.co/QIQP30rv2q
– Michael Saylor (@michael_saylor) March 12, 2021
Based on today’s price, MicroStrategy has an unrealised gain of $2.988 billion. The move coincided with a bounce at $55k and subsequent recovery back above $57k at the time of writing.
Saylor says governments want in on bitcoin
During a recent interview, Saylor dropped the bombshell that governments, via sovereign wealth funds, are the next class of buyer ready to buy bitcoin.
He said part of the reason for this is gold’s deteriorating Bitcoin Era performance. After gold hit an all-time high of $2k/oz in August 2020, the precious metal fell into a descending channel.
Things took a turn for the worse in late February when the price broke below the key support level of $1.7k. Since the beginning of the year, gold has fallen 12%. In contrast, bitcoin is up 95%.
With this, there is a growing realisation that Bitcoin is the right hedge – not gold.
Saylor says a key sticking point was moving too early. But with big-name institutions like Tesla and PayPal getting in, sovereign wealth funds now have the confidence to follow suit, he says.
„I think it’s inevitable that we will see SWFs. They have to move, I mean they have infinite money, and when you have infinite money and you see that this asset class has the best performance, the only question is whether other people with money will do the same.“
MicroStrategy share price continues to plummet
As profitable as MicroStrategy’s bitcoin play has been, all is not well on the share price front. Over the course of a month, MSTR has lost 24% of its share price. Last week, it hit a low of $620.
While this is part of a broader downward trend in tech stocks, it hasn’t stopped critics from criticising MicroStrategy’s continued bitcoin purchases. Marc Lichtenfeld, the chief income strategist at The Oxford Group, called it irresponsible behaviour that is excessive and leaves the company vulnerable.
„I think MicroStrategy is being completely irresponsible with shareholders‘ capital by putting so much of their wealth into a very speculative and volatile asset.
I have never seen a company do anything like this. It goes beyond the excesses I saw during the dot-com boom, and I think it makes them very, very vulnerable.“
Saylor has previously stated that the upside potential makes buying bitcoin the right move.