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MicroStrategy announced today that it spent nearly $1 billion to buy an additional 10,624 BTC, increasing its total BTC holding to 660,624 BTC.
The acquisition comes at a time of heightened scrutiny for MicroStrategy icon Michael Saylor. The company faced significant pressure during the broader market downturn caused by Bitcoin’s price weakness.
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Accumulation continues as pressures increase
Saylor continued to expand MicroStrategy’s ownership of Bitcoin Although public scrutiny continues In the company’s approach.
price Bitcoin has weakened Over the past two months, it has failed to regain the $100,000 level it lost in November and is currently trading at around $89,950.
MicroStrategy is now effectively a Bitcoin-focused treasury rather than a traditional software company, I was hit hard Its value moves at the same rate as Bitcoin’s volatility, creating a persistent headwind.
However, the company did Move forward with new purchases. It is worth noting that he did not buy during the recent drop to $86,000 over the weekend, but rather announced his last hold as Bitcoin briefly rose to $90,615.
Some saw the move as a way to motivate backers and keep morale high among loyal investors. However, some analysts believe that MicroStrategy’s ability to fund future Bitcoin purchases is diminishing.
Analyst Novakula Okami noted that in this latest round of purchases, MicroStrategy was only able to sell $44 million of preferred stock last week, which is a very small amount compared to past rounds of capital raising.
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This suggests that the market may be less willing to lend or buy their preferred stock.
for what Financial support has become more challengingMicroStrategy is converting back to issuing common shares. In this case, he sold 5.1 million MSTR shares at $181 each, diluting the outstanding equity.
Given MicroStrategy’s current circumstances, this approach may soon become unsustainable.
Weak equity threatens the funding model
Try MicroStrategy A sharp decline at the beginning of December When its market value has temporarily fallen below the net worth of its Bitcoin holdings. The event produced new concerns about leverage, liquidity and general investor confidence.
The stock price fell to $156, reducing the company’s value to $45 billion. At the same time, MicroStrategy’s Bitcoin holdings were valued at about $55.2 billion, representing an unusual period in which the market values ​​the company below its underlying assets.
MicroStrategy has since regained its position. However, if its stock returns to trade below the value of the assets it holds, issuing new shares will become more difficult and less effective.
As leverage continues to decline and equity dilution becomes less sustainable, MicroStrategy may be facing a moment. You cannot raise enough capital To continue his pattern of accumulation.
