Microstrategy’s latest acquisition of 660 Bitcoins brings its total holdings now valued at nearly $5 billion to 125,051 BTC.
Microstrategy has increased its Bitcoin holdings by 660 BTC. The business intelligence software firm added to its cryptocurrency holdings, totalling 125,051 BTC. The latest acquisition sees the company own 0.5% of the entire Bitcoin supply in circulation, with a value of almost $5 billion.
Microstrategy’s CEO, Micheal Saylor, a passionate Bitcoin proponent who owns a substantial digital asset, tweeted about the latest acquisition.
MicroStrategy’s Purchase Affirms Bullishness Of Institutional Investors
Microstrategy’s latest purchase gives further credence to the notion that institutional investments are bullish on digital assets irrespective of present market conditions. These companies have continued to invest in the crypto space with long term targets. Tesla and Grayscale are some examples of institutions that continue to bet on digital assets.
Furthermore, the acquisition sees Microstrategy back the words of its Chief Financial Officer Phong Le. He stated that the company would continue to purchase Bitcoin despite its dip in price with no intention of selling at any point. The company seems to have struck gold with their previous $3.78 billion Bitcoin purchases, realising a profit of nearly $1 billion.
With an average buy price of $30,200/BTC, Microstrategy has bought almost every Bitcoin dip. However, since the crypto market capitulation, it has adopted a risk-averse approach to its latest purchases. The 660 BTC was bought at 21 BTC per day over 32 days, from December 29 to January 31 2022. This is significantly less than the 1,914 acquired at a rate of 96 BTC per day over the previous 20 days. These investments then pale compared to the 1,434 Bitcoins bought in the first nine days of December.
The race to stack more Bitcoin could be getting fiercer as governments may also want a piece of the pie. El Salvador’s President, who the IMF recently advised to ditch its Bitcoin agenda, tweeted the purchase of more Bitcoin. He said the country had added 410 BTC at a total price of $15 million.
The Central American country has become more determined on its Bitcoin adoption strategy and openly rejected the IMF’s suggestion to ditch the digital currency. Their implementation plan appears to be sustaining momentum as it has recorded 4 million users since its launch. This figure represents over 61% of the country’s total population, about 6.5 million.
Microstrategy’s Stock Prices Continues to Decline
Despite the profitability of its Bitcoin endeavour, Microstrategy’s stock has been falling steadily for some time, somewhat mirroring Bitcoin’s price decline. Its stock price has continued to tumble since the beginning of the year, with a 32% drop so far. However, the reduction has been even more significant over the previous three months, with a fall of more than 50%.
Microstrategy’s stock price peaked at $1,315 in February of last year, following the meme stock mania. It plummeted to around $450, before rising to about $900 in late November. The overall trend has been downwards ever since the last price rise. However, following the announcement of its newest Bitcoin purchase, its stock price rose 5.8% to $389.50 before continuing its slide down.
Recently, the software company released a report of its fourth-quarter revenue for 2021 in which it reported a net loss of $90 million. A closer look reveals that the loss is due to the inclusion of impairment losses on its Bitcoin holdings. The losses incurred on its Bitcoin holding stands at $147 million, which essentially wiped out its $110.5 million gross profit from its software business.
As per the SECs (Securities and Exchange Commission) requirements, all companies with Bitcoin on the balance sheet are to use GAAP when filling their earnings report. The Generally Accepted Accounting Principle denotes that a corporation records an impairment loss if the price of an asset falls during a quarter. However, if the price rises, it is not recorded on the balance sheet as profit.
Consequently, Microstrategy seems to have reworked its book after initially failing to record its Bitcoin impairment loss in its fourth-quarter report. Its failure to do so drew the objection of the SEC, which mandated its inclusion. The software company has now followed suit and revised its books.
Do you think Microstrategy’s continued Bitcoin purchase supports bullish institutional investment sentiments? Let us know your thoughts in the comments below?
Chris is a crypto enthusiast and a firm believer in the blockchain’s ability to create a new financial paradigm. Through writing, Chris hopes to expose the intricacies of this disruptive technology and how it is beneficial to Africans and developing countries. He aims to give readers a rational and unbiased outlook of the industry by equipping them with the necessary information to make enlightened investment decisions.
