- November 27, 2023
- Posted by: [email protected]
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Michael Saylor’s MicroStrategy has seen a sharp increase in its shares, which have now reached a two-year high. According to Yahoo! Finance, the technology company’s shares ended above $500 on Black Friday, a level not seen since December 2021. At the moment, MicroStrategy has a $7.55 billion market value, which is evidence of its well-thought-out decision to keep significant amounts of Bitcoin. The company posted a quarterly loss at the start of the year, but in less than a month, its stock price doubled.
MicroStrategy’s founder and chairman, Michael Saylor, began the accumulation of Bitcoin in August 2020 as a hedge against inflation, a decision that has proven profitable. Saylor offered bullish comments for the next 12 months in an interview with CNBC, citing increased demand, falling supply, and an unprecedented position in Wall Street history.
Throughout the year, MicroStrategy’s financial fortunes improved. The company’s bitcoin holdings turned profitable in April when bitcoin’s price exceeded $30,000. With the acquisition of an additional 1,045 bitcoins, bringing its total holdings to 140,000 bitcoins, the average purchase price per coin dropped to $29,803.
MicroStrategy rebounded to profits in the second quarter, despite a $24 million Bitcoin impairment charge in the earnings report. As the largest publicly traded company with Bitcoin on its balance sheet, MicroStrategy continued its BTC buying spree, accumulating 152,800 coins valued at approximately $4.4 billion.
Interestingly, stocks of companies with exposure to Bitcoin outperformed the cryptocurrency itself, which had already witnessed an 87% increase in value during the year. Despite a larger net loss of $143.4 million in the most recent quarterly report, MicroStrategy continued its bitcoin acquisition plan, purchasing an additional 6,067 bitcoins for $167 million.
With its substantial holdings, MicroStrategy currently controls about 0.75% of Bitcoin’s total circulating supply. The company’s shares are poised to benefit from the upcoming Bitcoin halving event, which occurs approximately every four years as part of the Bitcoin protocol.
The halving event, deep-rooted in the Bitcoin protocol, involves a reduction in the rate at which new bitcoins are created and awarded to miners. This mechanism aims to control inflation and limit the supply of bitcoins in circulation, impacting the supply and demand dynamics of bitcoin and, consequently, its price.
Given the strong correlation between MicroStrategy’s stock price and the price of Bitcoin at around 90%, Berenberg believes that MicroStrategy’s stock is likely to rally alongside Bitcoin. This underscores the interconnected relationship between MicroStrategy’s strategic Bitcoin holdings and its stock performance, marking a significant chapter in the evolving landscape of digital asset investment.
