Bitcoin Rally Boosts MicroStrategy’s Investment
At the time of writing, Bitcoin was trading at $30,179, above MicroStrategy’s average purchase price of $29,803. The cryptocurrency has experienced an 82% increase year-to-date, with its best quarterly performance in two years. This price surge is partly attributed to the possibility of interest rate hikes peaking amid banking stress in the U.S. and Europe.
Although MicroStrategy’s holdings are technically in the green, the profit margin is only a few hundred dollars per bitcoin. If the company were to sell its entire holdings at once, it would likely cause a significant price drop, making it challenging to sell all the bitcoins for a profit.
Recent Purchases and Profits
MicroStrategy’s average purchase price was lowered through recent acquisitions of 1,045 bitcoins on April 5 and 6,455 bitcoins on March 27. These purchases have helped the company’s bitcoin holdings recover from the red since June 2022, when the cryptocurrency market faced challenges like the collapse of Celsius and the failure of Three Arrows Capital.
Currently, MicroStrategy’s bitcoin holdings are worth over $4.2 billion. The company’s shares have also seen significant growth, with a 114% increase year-to-date and a closing price of $312.78.
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MicroStrategy’s Pioneering Bitcoin Bet
MicroStrategy gained attention in 2020 when it first invested $250 million in Bitcoin as part of its treasury reserve strategy. Despite initial skepticism, the company has continued to add to its holdings, and its executive chairman, Michael Saylor, has become a vocal advocate for Bitcoin.
Saylor has expressed that MicroStrategy has no intention of selling its Bitcoin holdings in the foreseeable future, except for securing tax benefits in a single instance last year. The company’s investment has significantly influenced its stock price performance, with a 40% growth in the past month.