Quick Facts
MicroStrategy acquires 5,200 Bitcoin at an average price of $106,000
The Unexpected Pause: MicroStrategy’s Bitcoin Buying Slows Down
MicroStrategy, the Virginia-based enterprise software company, has been a steady and prominent player in the cryptocurrency market. Since 2020, the company has been investing heavily in Bitcoin, gradually scooping up a significant portion of the cryptocurrency. However, last week, the narrative took a surprising turn as MicroStrategy slowed down its Bitcoin buying, reporting the smallest BTC purchase since July 2020.
A Record-Breaking Run
Before delving into the latest development, let’s take a brief look at MicroStrategy’s impressive Bitcoin buying history. The company first made headlines in August 2020 when it announced its first significant Bitcoin purchase, acquiring 21,454 BTC at an average price of $9,694 per coin. Since then, MicroStrategy has continued to make regular and strategic investments in Bitcoin, gradually amassing a substantial stash.
Fast forward to January 2022, and MicroStrategy has become one of the largest institutional holders of Bitcoin, with a staggering 132,500 BTC (worth approximately $14.2 billion) in its treasury. Not only has the company’s Bitcoin portfolio grown exponentially, but its buying strategy has also become a benchmark for other institutions considering similar investments.
The Latest Acquisition: A Record-Low Buy
Last week, MicroStrategy announced its latest Bitcoin purchase, reporting the smallest buy since July 2020. The company acquired 5,257 BTC at an average price of $106,000 per coin, totaling around $558 million. While this number may seem large to some, it represents the lowest dollar value purchase since the company began its Bitcoin buying spree.
This development is striking, especially when considering the company’s previous buying patterns. As shown in the table below, MicroStrategy’s average monthly Bitcoin purchases have been steadily increasing over the past year. The latest acquisition is a notable exception, and raises several questions about the company’s current investment strategy.
| Month | Number of BTC | Average Price | Total Value (USD) |
|---|---|---|---|
| Aug 2020 | 21,454 | $9,694 | $207,000,000 |
| Sep 2020 | 38,250 | $10,744 | $412,000,000 |
| Oct 2020 | 45,053 | $11,264 | $503,000,000 |
| Nov 2020 | 30,657 | $12,333 | $377,000,000 |
| Dec 2020 | 33,940 | $13,375 | $454,000,000 |
| Jan 2021 | 22,000 | $15,000 | $330,000,000 |
| Feb 2021 | 20,210 | $16,345 | $329,000,000 |
| Mar 2021 | 20,210 | $23,595 | $474,000,000 |
| Apr 2021 | 34,530 | $55,100 | $1,900,000,000 |
| May 2021 | 13,727 | $58,890 | $806,000,000 |
Reasons Behind the Pause
There are several reasons that could have led to MicroStrategy’s slowing down of Bitcoin buying. One possibility is that the company’s treasury may be depleted, at least for the time being, following a series of large purchases over the past year. With over $14 billion invested in Bitcoin, MicroStrategy may be re-evaluating its investment strategy to ensure a more sustainable pace going forward.
Another potential reason for the pause could be related to the company’s business operations. As an enterprise software company, MicroStrategy may be experiencing a temporary slowdown in its core business, leading to reduced cash flows. This could force the company to reassess its investments, including its Bitcoin holdings, to ensure alignment with its business strategy.
A third possibility is that MicroStrategy is taking a more strategic approach to its Bitcoin buying, focusing on opportune moments to enter the market rather than buying in bulk. This approach would allow the company to maximize its returns over time, potentially leading to more significant portfolio growth in the long run.
The Future of Institutional Investment
MicroStrategy’s Bitcoin buying spree has paved the way for other institutions to follow suit. As the company’s experience demonstrates, a strategic and patient approach to investing in cryptocurrencies can yield significant returns over the long term.
As more institutions become comfortable with the idea of investing in cryptocurrencies, we can expect to see a surge in institutional investment, driving growth and adoption in the market. This will not only benefit investors but also contribute to the development of the broader cryptocurrency ecosystem.
In the future, we can expect to see new opportunities arise, potentially leading to a new wave of institutional investment in the months and years to come.
