MicroStrategy has just ramped up its Bitcoin cache, snagging an extra 11,931 BTC for a whopping $786 million. This latest acquisition, funded through convertible notes and a bit of spare cash, came at an average cost of about $65,883 per Bitcoin.
As things stand on June 20, the company boasts a staggering 226,331 BTC in its vaults, having invested roughly $8.33 billion at an average price of $36,798 per coin.
MicroStrategy surpasses Bitcoin
Wall Street wealth manager Bernstein recently kicked off its coverage of MicroStrategy with a resounding outperform rating and a target price of $2,890 per share. That’s a tidy 80% rise from its last close at $1,483.88, marking a huge uptrend as the stock itself has already surged by 135% since the beginning of the year.
To put that in perspective, Bitcoin has risen by 57% over the same timeframe. According to Gautam Chhugani of Bernstein, since transforming from a modest software venture to a Bitcoin heavyweight in August of 2020, MicroStrategy has owned up to 1.1% of the global Bitcoin supply, now valued at around $14.5 billion.
The company’s founder, Michael Saylor, has intertwined his identity so closely with Bitcoin that it has transformed MicroStrategy into a magnet for large-scale investment, both in debt and equity, fueling its aggressive Bitcoin buying strategy.
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Chhugani points out that over the last four years, MicroStrategy’s proactive investment approach has increased the Bitcoin per equity share and quadrupled the Bitcoin dollar NAV per share. This growth rate outpaces the Bitcoin spot price growth, which has approximately doubled in the same period.
Bitcoin ETFs drag markets down
Jag Kooner, the Head of Derivatives at Bitfinex, shed some light on recent market dynamics that MicroStrategy might be capitalizing on. Last week, the cryptocurrency market saw a break from a 20-day streak of inflows, switching to outflows in the past three trading days. Over $550 million flowed out last week and $146 million on the first day of this trading week.
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In an email to Cryptopolitan, Kooner says these outflows are primarily driven by two factors. First, a lack of conviction among ETF investors leading them to sell below their cost basis, which often exacerbates market volatility. For instance, net inflows peaked in late April with over $1 billion when Bitcoin prices soared above $70,000. However, a sharp reversal occurred as prices dipped towards $60,000.
Second, the unwinding of the basis arbitrage trade has also contributed. As CME futures for Bitcoin saw a decline in open interest by $1.2 billion over the past 10 days, it signals that negative funding rates are prompting investors to pull back from previously lucrative arbitrage opportunities.
Jai Hamid
