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In 2023, MicroStrategy, led by its bitcoin-supporting founder and CEO Michael Saylor, saw its shares skyrocket by an impressive 246%. The company’s shares saw a notable rise on Thursday, rising 6% to approximately $492 per share. This rise can be attributed to MicroStrategy’s strategic investment in bitcoin, the world’s largest cryptocurrency, which also hit a new yearly high on Friday, surpassing $37,900. The company’s significant bitcoin holdings, amounting to billions of dollars, have contributed significantly to this 122% year-to-date increase in the cryptocurrency’s value.
Michael Saylor has expressed his belief that the unique economic environment, marked by government-induced inflation and technology-driven deflation, makes it difficult for companies outside the elite ‘Magnificent Seven’ group to achieve significant, sustained growth. . In an interview with Fox Business, he discussed how traditional companies metaphorically fight with one hand tied behind their back, and emphasized the need for such companies to expand their revenues and cash flows by a minimum of 20% annually to keep pace with companies dominant like Apple. Microsoft and others in the ‘Magnificent Seven’.
There are seven companies that generate all profits for shareholders. There are 7,000 companies that cannot keep up. What we did in August 2020 was recognize that there is no way for us to surpass Google, Microsoft and Apple Computer as a mid-sized software company.
Saylor’s strategy for MicroStrategy involved seeking a “high-growth digital monopoly” for investment, which led to the selection of bitcoin as the most promising asset. He highlighted bitcoin‘s rapid growth rate of 40-50% annually and explained how investing in it has allowed MicroStrategy to use its balance sheet for corporate expansion. Saylor’s vision extends beyond the current year as he anticipates further growth for bitcoin, especially with the potential approval of bitcoin spot ETF products by regulatory bodies. Bloomberg Intelligence strategists predict a high probability of this approval by January 2024.
bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin is coming. pic.twitter.com/5oE42SQvgC
—Michael Saylor (@saylor) November 9, 2023
Saylor has a positive outlook on bitcoin‘s future, especially considering the upcoming halving in April, which will cut its supply in half, and the anticipated launch of spot ETFs, which he believes will double demand. This dynamic, he suggests, will lead to a price adjustment necessary to balance the market.
MicroStrategy’s bitcoin Accumulation: A Strategic Asset Accumulation
Over the past three years, MicroStrategy has strategically accumulated more than 158,000 bitcoins. This significant investment was made possible by the company’s allocation of funds and proceeds from the sale of bonds. Surprisingly, the current value of these bitcoin holdings makes up more than 80% of MicroStrategy’s market capitalization, which stands at $7.1 billion.
Investment in these bitcoin assets has been substantial, totaling a cumulative total of $4.6 billion, according to bitcoin Treasurys. This amount dwarfs the investment of the next largest institutional holder, bitcoin miner Marathon Digital. Marathon Digital’s holdings are comparatively modest, with 13,000 bitcoins valued at around $500 million at the current market price, which is more than ten times less than MicroStrategy’s investment.
In terms of recent acquisition activity, MicroStrategy has continued to expand its bitcoin portfolio. Before September 24, the company made additional purchases of 5,445 bitcoins, spending just under $150 million. This equates to an average acquisition cost of approximately $27,053 per bitcoin, indicating the company’s continued commitment to expanding its bitcoin assets amid varying market conditions.
To the moon?
Saylor’s bullish views are echoed by other experts in the digital asset sector, who predict that bitcoin could soar beyond $100,000 following the halving. Historically, each of the three previous bitcoin halving events was followed by all-time highs in the following 12 months. Saylor remains optimistic about the future of this asset class, especially over the next year.
However, a warning is in order. Due to this recent surge in cryptocurrencies, market sentiment at the moment has become very bullish to the point of “greed.” It is at times like this that significant drops can occur, and recently there was a “flash drop” in bitcoin, which was bought up quickly. A more serious correction may be around the corner, so investors are advised to keep it in mind. Youtuber Jason Pizzino He explains some of that in one of his recent videos on the subject.
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