Michael Saylor's Latest Bitcoin Bet Down by $62 Million, Will It Recover?

U.Today - MicroStrategy, the business intelligence firm whose appetite for Bitcoin (BTC) remains insatiable, recently bought more BTC. The purchase, which cost the firm approximately $561 million for 5,262 BTC, was made at an average price of $106,662 per BTC.

Bitcoin’s price drop implications for MicroStrategyGiven recent developments in the broader cryptocurrency market, it is easy to tag this recent purchase a wrong move. Generally, the Bitcoin price is facing volatility as the leading digital asset struggles to breach the historic $100,000 mark and flip it as support.

As of this writing, Bitcoin is trading at $94,238.21, up by 1.52% in the last 24 hours. Despite its trading volume surging by 34.12% to $54.58 billion, investors’ confidence has not impacted the price.

This slump in Bitcoin’s price has set MicroStrategy back by over $65 million from its last purchase alone. At BTC’s current rate 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 in previous purchases. As this stands, unless Bitcoin rebounds quickly enough, MicroStrategy could have a lot of loss to deal with.

MicroStrategy’s financing and obligationsIt is worth noting that MicroStrategy’s Bitcoin purchases are made with capital raised from issuing convertible notes, securing credit lines, selling shares and using corporate bonds. It recently unveiled plans to raise $42 billion from equity and fixed-income securities in the coming years.

Therefore, for MicroStrategy to meet its obligations to investors who bought these convertible notes, the price of Bitcoin must stay up. Primarily, a slump in price could trigger panic, causing its shares and MSTR to plunge as well. This development could negatively affect MicroStrategy’s capital base.

Additionally, as the largest corporate holder of Bitcoin, which has about 2.2% of the total supply, MicroStrategy’s actions could tremendously impact the asset's price outlook.

Analysts insist that given the pending change of administration in the U.S. by Jan. 20, 2025, bullish sentiment could support Bitcoin on its price recovery path. How this unfolds, only time will tell.

Source: Investing.com