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(BTC) prices surpassed $70,000 earlier this week, hitting a new all-time high for the first time since the cryptocurrency bull run in 2021. The latest rally for the world's largest cryptocurrency has been warmly received by the community cryptographic. However, arguably no one is celebrating more than Michael Saylor, the man behind a company that holds the title of the world's largest corporate investor in Bitcoin.
Bitcoin price rises
On Monday, the price of Bitcoin hit a new record high of $72,910 as its meteoric rise shows no signs of stopping.
BTC, by far the largest crypto asset, has regained investor attention following the approval of nearly a dozen new spot bitcoin exchange-traded funds (ETFs) earlier this year, and optimism that the Federal Reserve will soon can begin to reduce interest rates.
Investment in the top 10 U.S. spot bitcoin exchange-traded funds saw a slight drop to a two-week low in the week leading up to March 8, but still racked up nearly $2 billion, data shows of LSEG.
“Bitcoin has started the week on a high note, boosting the entire cryptocurrency market,” said Nick Cawley, strategist at DailyFX.
With Bitcoin supply capped at 21 million coins, investors are scrambling to join the ongoing bull run ahead of April's “halving” event, which will further tighten supply.
This event, which occurs every four years, halves the rate of new coins entering the market and the reward for mining them, which has historically given a boost to the price of Bitcoin.
Michael Saylor's MicroStrategy Buys More Bitcoin
Bitcoin's price surge to a new all-time high came just after MicroStrategy Incorporated (NASDAQ:), an enterprise software maker founded by Michael Saylor, made another significant investment in the flagship cryptocurrency.
According to documents filed with the SEC, the company purchased 12,000 BTC tokens for $821.7 million, marking its second largest purchase since it began investing in the cryptocurrency nearly four years ago.
This latest investment increases the company's Bitcoin portfolio to approximately 205,000 tokens, valued at more than $14 billion. The purchase, carried out from February 26 to March 10, was funded primarily by proceeds from MicroStrategy's recent $800 million sale of convertible notes.
Under Saylor's leadership, the business intelligence firm turned to Bitcoin in 2020 as a strategy to hedge against inflation and as an alternative to cash reserves.
In the first quarter of 2024 alone, the company's investment in Bitcoin surpassed $1 billion, surpassing half of the total spent last year. Since Saylor began Bitcoin acquisitions, the value of the cryptocurrency has skyrocketed by approximately 675%.
Additionally, MicroStrategy's foray into Bitcoin has notably rejuvenated its share price, which is up more than 1,000% since the strategic shift. The company's market value now stands at about $25.7 billion, surpassing its peak in March 2000.
The company's average purchasing price for Bitcoin is now $33,706, with the last lot purchased at an average of $68,477 per token.
What do analysts say about Microstrategy?
In the wake of its new investment in Bitcoin, Canaccord Genuity analysts said the company's aggressive Bitcoin purchases “drive even more profits” for MicroStrategy.
The brokerage raised the stock's price target to $1,810.
While MicroStrategy primarily funded its Bitcoin acquisitions in the latter part of 2023 and early this year through equity sales via At the Market (ATM) offerings, the company opted to diversify its financing approach by leveraging its complete capital by issuing a convertible note, Canaccord analysts said.
“Importantly, just as putting debt to work can generate higher balance sheet returns on equity, purchasing this additional bitcoin through a conversion has helped drive MSTR's equity value premium relative to your BTC HODL at approximately 86% according to our sum of the parts (SOTP) analysis,” they wrote.
“We also attribute this record premium to the rise of BTC's place, where volatility drives higher demand for MSTR options,” the analysts added.
They noted that MSTR's practice of issuing shares at a premium to acquire more Bitcoin could positively influence its share price.
This observation was made through detailed analysis, which included a hypothetical scenario in which the company sells $500 million in stock to buy Bitcoin, benefiting from an 86% premium to its SOTP valuation.
“The bottom line here, based on our analysis, is that such a purchase generates ~$23 per share in price upside,” the Canaccord team wrote.
“Although small in percentage terms, the fact that MSTR created a bitcoin acquisition model in the first place is noteworthy and that it is working, at least currently,” they added.
Bitcoin prices are already up more than 70% this year, while MicroStrategy stock saw a triple-digit gain of 142% during that period.
