MicroStrategy purchases $615.7 million in Bitcoin ahead of ETF decision

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Software company MicroStrategy has increased its Bitcoin holdings as it anticipates the potential approval of a spot Bitcoin exchange-traded fund by the U.S. Securities and Exchange Commission.

MicroStrategy chairman Michael Saylor shared the news Wednesday on social media, saying, “MicroStrategy has acquired an additional 14,620 BTC for _{$615.7 million at an average price of $42,110 per #bitcoin. As of 12/26/23, @MicroStrategy now hodls 189,150 $BTC acquired for} $5.9 billion at an average price of $31,168 per bitcoin. $MSTR.”

According to the company’s filing to the SEC, MicroStrategy purchased 14,620 BTC for about $616 million (around $42,110 per BTC) from November 30 to December 26.

Last month, MicroStrategy also revealed a $593.3 million purchase of 16,130 BTC. In total, the company acquired BTC at an average price of $31,168 per coin.

MicroStrategy now possesses 189,150 BTC valued at $8.1 billion according to current prices, solidifying its position as the largest corporate holder of this cryptocurrency.

Saylor: Bitcoin ‘superior to cash’

Saylor began MicroStrategy’s Bitcoin buying strategy on August 11, 2020, investing $250 million. Subsequently, the company continued purchasing the asset, with Saylor advocating it as “digital gold” and a superior alternative to holding cash.

“MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy,” he said in 2020.

Saylor claims that investing in BTC for the long term yields better returns for company shareholders and helps combat unavoidable inflation. Despite the cryptocurrency’s short-term ups and downs, its value has consistently risen since its launch in 2009.

“But we are making a 10-year investment, and if you look at Bitcoin over the course of 10 years, it’s not volatile at all—it’s just going up,” Saylor said in 2021.

The company has said that its Bitcoin investments are for the long term, intending to keep accumulating the world’s largest and most well-known cryptocurrency.

“Due to its limited supply, bitcoin offers the opportunity for appreciation in value if its adoption increases and has the potential to serve as a hedge against inflation in the long-term,” MicroStrategy said in its latest quarterly report.

MicroStrategy stock sees 350 percent surge

MicroStrategy’s stock (MSTR) has surged by more than 350 percent in 2023, driven significantly by anticipation regarding the approval of a spot Bitcoin ETF in the U.S. At the time of writing, MSTR is trading at $654, marking an 8.3 percent increase intraday.

The company’s significant Bitcoin holdings are driving its stock performance. MicroStrategy’s involvement with the cryptocurrency led some analysts to dub its stock “essentially a leveraged Bitcoin ETF.” Based on an analysis from Seeking Alpha regarding the company’s quarterly earnings, a mix of long-term, low-interest debt and share issuance has financed MicroStrategy’s BTC purchases.

As of September 30, MicroStrategy’s total liabilities stood at $2.534 billion, marking a 7.7 percent decrease year-over-year, with long-term liabilities totaling $2.180 billion.

MicroStrategy’s decision to purchase Bitcoin to safeguard the value of its reserve assets has bolstered the attractiveness of the company’s stock, often aligning with the performance of the digital asset.

“This is not a short-term trading strategy but rather reflects a belief that bitcoin will ultimately prove a superior store of value,” said analysts at TD Cowen.

“The company remains an attractive vehicle for investors looking to gain bitcoin exposure.”

Lately, multiple filings, including those from major traditional finance players like BlackRock, have revitalized the crypto markets, which previously suffered a downturn following the collapse of prominent firms such as Sam Bankman-Fried’s FTX.

A spot crypto ETF would follow the actual market price of the underlying crypto asset, providing investors with exposure to the token without requiring them to purchase the currency.