PakGazette – MicroStrategy, the business intelligence firm whose appetite for (BTC) remains insatiable, recently bought more BTC. The purchase, which cost the company approximately $561 million for 5,262 BTC, was made at an average price of $106,662 per BTC.
The Implications of the Bitcoin Price Drop for MicroStrategy
Given recent developments in the broader cryptocurrency market, it’s easy to label this recent purchase as a false move. Overall, Bitcoin price is facing volatility as the leading digital asset struggles to surpass the all-time $100,000 mark and turn it into support.
At the time of writing, Bitcoin is trading at $94,238.21, up 1.52% in the last 24 hours. Even though its trading volume increased by 34.12% to $54.58 billion, investor confidence has not affected the price.
This drop in the price of Bitcoin has meant a setback for MicroStrategy of more than $65 million since its last purchase alone. At the current BTC price of $94,238, MicroStrategy has suffered a loss of $65,375,088.
This is significant given that MicroStrategy is always ahead, with huge profit margins on previous purchases. As things stand, unless Bitcoin recovers quickly enough, MicroStrategy could have to face a lot of losses.
MicroStrategy Financing and Obligations
It is worth noting that MicroStrategy’s Bitcoin purchases are made with capital raised by issuing convertible notes, obtaining lines of credit, selling shares, and using corporate bonds. It recently revealed plans to raise $42 billion in equity and fixed-income securities over the next few years.
Therefore, for MicroStrategy to meet its obligations to the investors who purchased these convertible notes, the price of Bitcoin must remain high. Mainly, a drop in price could cause panic, causing its stock and MSTR to plummet as well. This development could negatively impact MicroStrategy’s capital base.
Additionally, as the largest corporate holder of Bitcoin, holding around 2.2% of the total supply, MicroStrategy’s actions could greatly impact the asset’s price outlook.
Analysts insist that given the pending change of administration in the US on January 20, 2025, the bullish sentiment could support Bitcoin on its price recovery path. How this will play out, only time will tell.
