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In a recent SEC filing, MicroStrategy stated that it purchased over 4,000 Bitcoin ($BTC) between February 15 and April 4th for $190.5 million. The company used its subsidiary, MacroStrategy LLC, to buy this impressive amount of cryptocurrencies.
What does this decision imply for the company led by Michael Saylor? And what should we expect from the future?
A Quick Introduction to MicroStrategy and Michael Saylor
As a provider of business intelligence (BI), mobile software, and cloud-based services, MicroStrategy Incorporated first appeared in 1989. The words we have just mentioned did not make any sense to anyone thirty years ago.
Tysons Corner, Virginia, in the Washington metropolitan region, is the company’s headquarters.
MicroStrategy’s business model evolved until it joined the Bitcoin hype. In Summer 2020, Michael Saylor publicly announced the purchase of $BTC for around $250 million.
If we consider that, at the time, Bitcoin’s price was close to $11,000, the market is currently proving Saylor to be correct. MicroStrategy entered the market to preserve its treasury value; at the time, the U.S. Dollar had declined against major currencies.
If we sum up the latest purchase, MicroStrategy can boast 129,218 $BTC on its balance sheet. The company calculated an average purchase price of $30,700 (considering all fees and expenses). We are talking about a $3.97 billion financial empire if we do the math.
If you think that this is an impressive amount, you are right. However, it’s helpful to keep in mind that someone is beating MicroStrategy on $BTC holdings.
$BTC Recent Price Movements
The last weeks of 2021 proved to be dramatic for Bitcoin’s short-term investors. The worries of the economy on inflation rise and the response by the Federal Reserve created panic in the market.
The situation changed in the first weeks of 2022, and the recent geopolitical events in Europe have pushed the $BTC price higher. BITCOIN has witnessed a modest pullback ahead of the Bitcoin 2022 conference in Miami after rising rapidly during March.
Under the present macro conditions, Bloomberg Intelligence senior commodities strategist Mike McGlone gave a positive perspective on the $BTC future. McGlone mentions war and inflation as two factors that should not prevent Bitcoin from outperforming traditional assets.
Implicitly, one could easily assume that Michael Saylor shares McGlone’s view on the market. Other experts are going all-in on crypto, claiming that Bitcoin could easily hit $1 million.
Would Michael Saylor Ever Sell $BTC?
At the beginning of the year, Michael Saylor made his intentions on Bitcoin very clear. A 40 percent drop in Bitcoin’s value hasn’t deterred Michael Saylor from his multibillion-dollar bitcoin purchase ambition.
Even if the bear market continues for a lengthy period, the well-known $BTC bull said he wouldn’t consider selling. After announcing that it will keep buying more of the dominant digital currency, MicroStrategy has kept its pledge to do so.
Its stock jumped more than 900 percent after announcing this multibillion-dollar bitcoin gamble. According to Saylor, the firm’s Bitcoin holdings are a source of “great comfort” because of high inflation.
Since its limited supply and little connection with traditional markets, many consider Bitcoin an inflation hedge. IMF data suggests that it is becoming more of a risk asset, favoring gold as a true protective asset against inflation.
What Shall We Expect from the Future?
A rough start to the year hasn’t dampened the enthusiasm of Bitcoin specialists, who believe the currency will eventually hit $100,000.
As a result of Russia’s ongoing conflict in Ukraine, Bitcoin has witnessed increased volatility. It’s difficult to tell when the fight will end, and one may assume that instability will increase in the days to come.
The Fed’s statement that it will raise interest rates for the first time in three years seemed to have a role in this trend. Furthermore, President Joe Biden’s new executive order on crypto is also under close observation.
Michael Saylor’s bet is an ambitious one in this complex new context. It will be fascinating to look at the market’s next moves to evaluate the strategy.