has extended its momentum from last year into 2024, with the price of BTC surpassing the $72,000 mark earlier in the week, thus reaching a new all-time high for the first time since November 2021.
The impressive rise in cryptocurrency value has not deterred MicroStrategy Incorporated (NASDAQ:), the largest corporate investor in Bitcoin, from increasing its holdings. Under the leadership of Michael Saylor, the enterprise software maker has recently accelerated its purchases and now holds more than 200,000 BTC.
What does MicroStrategy do?
MicroStrategy is a provider of enterprise software solutions and services.
The company specializes in business intelligence, mobile software and cloud-based solutions. Its flagship product, the MicroStrategy analytics platform, offers advanced data analytics capabilities, enabling organizations to analyze large amounts of data and make informed decisions.
However, in recent years, the company has become widely known for its significant investment in Bitcoin as part of its corporate treasury strategy.
Positioning itself as the “world’s first Bitcoin development company,” the company has set out to contribute to the growth and development of the Bitcoin network. The company channels its cash flows and proceeds from equity and debt financing into acquiring Bitcoin, which it holds as its primary asset in treasury reserves.
How much Bitcoin does MicroStrategy own?
Earlier this month, filings with the US Securities and Exchange Commission (SEC) revealed that MicroStrategy acquired 12,000 BTC for $821.7 million, its second-largest purchase since it began its cryptocurrency investments nearly four years before.
This acquisition, executed between February 26 and March 10, was financed primarily with the $800 million generated by the company's recent sale of convertible notes.
This new purchase increased the company's BTC holdings to around 205,000 tokens, currently worth almost $15 billion. JMP analysts said yesterday that the price of Bitcoin could reach $280,000 in the next 3 years.
Most recently, on Wednesday, the business intelligence services provider announced plans to issue an additional $500 million in convertible debt, which it will use for more Bitcoin purchases.
If BTC continues to trade around the current level of $73,000, it will allow MicroStrategy to purchase approximately 6,800 additional tokens with the proceeds from this new offering.
JPMorgan warns of more debt-financed Bitcoin purchases
After purchasing over $1 billion worth of Bitcoin in the fourth quarter of 2023, MicroStrategy continued its aggressive focus strategy into 2024, acquiring roughly the same amount since the beginning of 2024.
As such, it is safe to say that the company itself has also played a notable role in amplifying the cryptocurrency's momentum.
However, its strategy of purchasing more BTC through convertible debt offerings adds risk to the cryptocurrency market rally, according to JPMorgan strategists.
“We believe MicroStrategy's debt-financed bitcoin purchases add leverage and froth to the current cryptocurrency rally and increase the risk of more severe deleveraging in a potential future recession,” said strategists led by Nikolaos Panigirtzoglou.
Bitcoin was trading near the $72,500 mark at the time of writing, up 72% year-to-date.
