PakGazette – MicroStrategy has made headlines again by purchasing 5,262 BTC for approximately $561 million at an average price of $106,662 per BTC. The company now holds a staggering 444,262 BTC, accumulated at a total cost of approximately $27.7 billion, with an average purchase price of $62,257 per BTC.
Despite an impressive profitability of 47.4% since the beginning of the quarter and 73.7% since the beginning of the year, skepticism about the company’s strategy is growing.
To sustain its purchases, MicroStrategy is believed to raise capital through methods such as issuing convertible and corporate bonds, obtaining lines of credit, and selling shares.
This cycle appears to work as follows: shares are sold to acquire the cryptocurrency, and the rising price per BTC increases the value of the assets, allowing for more loans, which are then reinvested in more purchases.
Some observers warn that a significant drop in the price of Bitcoin or MicroStrategy stock could trigger a cascading effect. A sharp decline in MSTR stock would weaken the collateral backing its loans, which could lead to forced sales of assets, including BTC.
This scenario could put downward pressure on the broader cryptocurrency market as the company now holds 2.2% of the global Bitcoin supply.
Thus, while some see Michael Saylor’s approach as a bold attempt to consolidate the role of cryptocurrency in the financial system, others see it as unsustainable. History offers a cautionary note: In 2000, MSTR stock rose to $333 before falling 99%, a crash that took 24 years to recover from.
