Microstrategy is Lining up for another Massive Purchase of BitcoinJune 15, 2021
The crypto market definitely reached a critical point during the mid-May price collapse. For a few hard days, the markets slid and the prices did the same. This period brought down not only bitcoin tokens but also every other altcoin out there. Since then, the markets have been in a strange and very soft position, with many analysts warning that a further slide down might be in the cards very soon. Now, however, there is one big and positive piece of news regarding that possibility.
It comes in the form of a big company deciding to purchase even more bitcoin to add to its corporate coffers. That company is none other than Microstrategy, which has already purchased billions of USD worth of digital assets. Also, the sum it is planning to spend on this new round of BTC purchase is impressive as well. Naturally, the decision has been noted by not just the crypto news outlets, but the broader field of social media and the cryptocurrency chatter that inhabits it. Because of that, the same bold move stands a chance of reigniting the market activity towards more bullish prospects.
Microstrategy, a business analyst company shocked many when it decided to purchase even more bitcoin recently. It announced its plans a week ago and then went to work generating the same funds. Now, it presented an update that showed it raising 500 million USD in bonds with the singular purpose of amassing additional bitcoin holdings. That means that this IT company will hold more BTC tokens than any other institutional investor as of yet.
At the same time, the decision signaled that investors still feel a level of optimism about the crypto space, despite the massive drop that the same markets witnessed not two months ago. Instead of retreating to a bearish mentality, Microstrategy at least is all about expanding its holdings even more. For them, the same cryptocurrency holds only a promius of great ROI and a prosperous supplemental liquidity, no matter the severity of the crash that took the prices down by over 50 percent on average across the digital currency markets.
2028 Security Notes
The company decided to procure the money for this investment through its security notes. Last Monday, it stated that it completed a 500 million USD offering in security notes. These are due in 2028 and the process managed to exceed expectations. Initally, the company sought to secure 400 million USD as its target.
Now, the company is saying that the proceeds from the same sale, of course after the deduction of commissions and additional expenses, will resolve in around 488 million USD. The entire sum will be used by this Virginia-based tech company for the purchase of bitcoin, more precisely additional BTC tokens that will be added to its already huge digital company holdings.
The prices of digital currencies jumped across the board on the news of this Microstrategy activity. It was one of the key movers that provided the tailwind for BTC to revisit the range above 40,000 USD, where this cryptocurrency has been stuck for several long weeks. ETH also managed to so far profit from the development, while the situation is similar to most altcoins as well. But, the media activity regarding the purchase worked so far in both directions. Microstrategy shares also benefited from the investors taking notice, so its shares surged almost 15 percent once the same announcement came out.
These then lifted the yearly gains of the company to nearly 40 percent. That is by no means a small number in a world of esports, digital social media and many other novel and quickly-developing investment opportunities. What is even more important is the feedback loop of the investment which is allowing the traditional company stock to gain additional investment traction. It is also almost certain that many other companies from the same industrial branches are following the same company and are calculating how similar decisions might benefit their businesses as well.
Company’s Holdings and Benefits
The amount of cryptocurrency that this IT company is presently holding is truly spectacular. While there is no information about the precise moment when it plans to use these 500 million USD to purchase bitcoin – it will likely aim for a favorable market opportunity – the world knows the precise amount of crypto it has now. According to the latest information, Microstrategy is the owner of 92,079 BTC tokens, which is a sum equal to well above 3.7 billion USD at the present moment.
When the subsequent half of a billion USD is added to that, it is clear that this institution is leading the pack in terms of crypto investment. The same fact is also reflecting itself in its other business domains, propping up its stock price, but also offering further benefits. One of them is millions of USD in free publicity which the same company can then leverage into attention to its services and anything else it can present to customers.
In many ways, the fate of Microstrategy is now firmly tied to the fate of cryptocurrencies, especially bitcoin. That stems not just from the investment in crypto that the company made and will make, but also because of the product they are developing. In that domain, Microstrategy is also working in a crypto-related field, making platforms that would allow insight into the market movements. But, overall, Microstrategy is now the crypto company, for better or worse.
For example, there is no company with a larger token holding than that of Microstrategy. Only one institution has more tokens, which is Grayscale, the investment management fund. It has nearly 655,000 tokens worth over 24 billion USD at the present moment. But, as a tech company, Microstrategy now carries the crypto mantle. That comes with both ample media attention, but also a connection to bitcoin and other crypto tokens which might turn into a liability at some point in the near future. Undoubtedly, many other companies will consider long and hard whether or not they seek to replicate that model of doing business.