MicroStrategy, Bitcoin’s Biggest Corporate Investor, Buys Another $414 Million As Omicron Variant Puts Crypto Prices Under ‘Serious Pressure’

MicroStrategy, Bitcoin’s Biggest Corporate Investor, Buys Another $414 Million As Omicron Variant Puts Crypto Prices Under ‘Serious Pressure’

Topline

MicroStrategy, the data analytics firm helmed by billionaire cryptocurrency bull Michael Saylor, announced another big investment in bitcoin on Monday morning, doubling down on its staggering commitment to the world's largest cryptocurrency as the nascent market reels from a nearly 15% correction this month and the threat of a new variant of the coronavirus.

Key Facts

In a regulatory filing on Monday, Virginia-based MicroStrategy, which owns more bitcoin than any other corporation in the world, disclosed it purchased approximately 7,002 bitcoins for about $414.4 million in cash, or $59,187 per coin, between October 1 and November 29.

The company says it now holds approximately 121,044 bitcoins, purchased for nearly $3.6 billion, or an average price of $29,534 for each bitcoin.

Its latest investment comes as the price of bitcoin struggles near a seven-week low after fears over a newly identified coronavirus variant, dubbed omicron, tanked the broader market on Friday.

At about $57,000 on Monday morning, the price of bitcoin has plummeted nearly 18% from a record high of about $69,000 set earlier this month, but it's still up a staggering 94% over the past year.

MicroStrategy helped fund the purchase using proceeds from a stock sale previously disclosed in June that has thus far raised approximately $414.4 million through the sale of 571,000 shares in the fourth quarter.

Shares of MicroStrategy, which has also used newly issued debt to buy bitcoin during the pandemic, jumped about 4% in pre-market trading Monday and are up nearly 60% this year despite falling 5.4% on Friday.

Key Background

Thanks to its growing bitcoin investment—rivaled only by Tesla's 42,000 coins—MicroStrategy shares have minted a stunning turnaround since the dot-com bubble tanked prices roughly two decades ago. The stock has skyrocketed more than 350% since the company first started buying bitcoin in August 2020, though it's also been incredibly sensitive to the nascent crypto market's outsized volatility. The stock is still down nearly 36% from a 21-year high in February, when recently skyrocketing bitcoin prices plummeted after Tesla CEO Elon Musk said on Twitter its prices seemed “a little high.” At the time, Saylor, who Forbes estimates is worth approximately $2.4 billion, said the company’s growing investment “reaffirms [the firm’s] belief that bitcoin, as the world’s most widely adopted cryptocurrency, can serve as a dependable store of value.”

Tangent

Crypto's wild price swings have only intensified this month, with the price of bitcoin falling to its lowest price since mid-October on Friday. After peaking at nearly $3 trillion in value on November 10, the crypto market now sits at a total market capitalization of less than $2.6 trillion.

Surprising Fact

MicroStrategy owns more bitcoin than any publicly traded company, but in its namesake bitcoin fund, investment manager Grayscale owns 654,885 tokens—worth more than $32 billion on Tuesday.

Contra

Despite bitcoin's explosive gains during the pandemic, not everyone's convinced the volatile asset has proven itself as a reliable store of value and inflationary hedge. "In recent weeks we've seen that, in times of real uncertainty, bitcoin has not done well as an inflation hedge or a safe haven asset," Oanda analyst Craig Erlam said in an email as prices struggled Friday. "There's no doubt it's a fascinating tradable instrument and a highly speculative one, but it's quite clear now that it's a risk asset and nothing more—at the moment anyway." If the new variant fuels additional stock-market losses, Erlam says bitcoin prices "could come under serious pressure."

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