MicroStrategy goes against the trend and aggressively purchases 8178 Bitcoins, ignoring the fall and restoring large-scale buying.

MicroStrategy (MSTR) has resumed large-scale purchases of Bitcoin, with documents submitted to the U.S. Securities and Exchange Commission (SEC) on November 17 showing that the company has purchased 8,178 Bitcoins. This purchase volume marks a significant increase compared to the company's weekly investments of about 400-500 Bitcoins in October and early November. This acquisition comes amid significant fluctuations in Bitcoin prices.

MicroStrategy Weekly Accumulation Reaches 8178 Coins, Setting a New Multi-Month High

(Source: SEC)

After several weeks of Bitcoin purchase volume hovering around 400 to 500 BTC, Michael Saylor's MicroStrategy announced a massive cryptocurrency investment on Monday. The purchase amount is approximately $835 million, with an average purchase price of about $102,171 per Bitcoin. This price is significantly higher than the current market price (around $94,000), indicating that MicroStrategy began accumulating this position when Bitcoin prices were higher.

Compared to MicroStrategy's Bitcoin investments in October and early November, the purchase volume has significantly increased this time. According to documents previously submitted by the company to the SEC, during the period from October to early November, MicroStrategy reported investing about 400-500 Bitcoins per week. This means that this week's purchase volume is approximately 16 to 20 times the previous weekly average purchase volume. The sudden acceleration of this buying strategy has attracted market attention, as investors try to understand why MicroStrategy has significantly increased its buying scale at this time.

MicroStrategy Recent Bitcoin Purchase Comparison

From October to early November: Purchase 400-500 Bitcoins weekly, approximately 40 to 50 million USD.

This week (November 18): A one-time purchase of 8,178 Bitcoins, costing $835 million.

Purchase Volume Increase: Increased 16-20 times compared to the average purchase volume of the previous week.

The change in the scale of this purchase may be related to multiple factors. First, MicroStrategy may have seen an opportunity to accumulate positions when the Bitcoin price retraced. Second, the company may have completed a new round of financing or bond issuance, obtaining sufficient funds. Third, Saylor may have decided to increase buying power during market panic based on confidence in Bitcoin's long-term prospects.

MicroStrategy's purchasing strategy is not random, but rather based on a clear capital allocation framework. The company raises funds through the issuance of convertible bonds and stocks, and then uses all the proceeds to purchase Bitcoin. This strategy makes MicroStrategy a “Bitcoin leveraged investment vehicle,” whose stock price performance often surpasses the fluctuation of Bitcoin itself.

MicroStrategy holds 649,870 coins firmly in the global first position

MicroStrategy remains the company with the largest Bitcoin holdings, holding 649,870 Bitcoins, thanks to a strategy of continuously buying cryptocurrency since August 2020. This holding accounts for about 3.1% of the total Bitcoin supply (21 million), making MicroStrategy the second largest holder of Bitcoin, after Satoshi Nakamoto (the founder of Bitcoin). At the current Bitcoin price of $94,000, MicroStrategy's Bitcoin holdings are valued at approximately $61.1 billion.

MicroStrategy's Bitcoin strategy began in August 2020 when the company announced it would adopt Bitcoin as its primary reserve asset. This decision was highly controversial at the time, as MicroStrategy was originally a corporate software company with no ties to the cryptocurrency business. However, Saylor believed that, in the context of the Federal Reserve's massive money printing leading to the devaluation of the dollar, Bitcoin was a better store of value. This radical capital allocation strategy transformed MicroStrategy from a small software company with a market cap of less than $1 billion into a Bitcoin-holding giant with a market cap exceeding $40 billion (based on the current stock price).

In contrast, the scale of cryptocurrency holdings of other listed companies is far smaller than that of MicroStrategy. BitMine Immersion Technologies holds the most Ethereum (ETH), but its holding market value is far lower than MicroStrategy's Bitcoin holdings. Forward Industries holds the largest stake in Solana (SOL), but it also cannot compare to the scale of MicroStrategy. This difference shows that MicroStrategy's aggressive approach to treating Bitcoin as a core asset on its balance sheet is unique.

MicroStrategy's success has also inspired other companies to follow suit. Tesla purchased $1.5 billion in Bitcoin in 2021, but later sold part of it due to environmental concerns. Square (now Block) also holds a significant amount of Bitcoin. However, no company has invested nearly all of its capital into Bitcoin like MicroStrategy. This extreme concentration strategy makes MicroStrategy the biggest beneficiary of Bitcoin's price (when it rises) or victim (when it falls).

Bitcoin drops 11% MicroStrategy stock price under pressure simultaneously

This acquisition comes at a time of severe fluctuation in Bitcoin prices. According to data from Nansen, the price of Bitcoin has dropped by about 11% over the past seven days, falling from around $106,000 to $94,191 at the time of writing. This decline continues the retracement trend from the historical high of $126,000 in October, with the current price down about 25% from that peak.

Despite the flash crash in Bitcoin prices last week, MicroStrategy's Executive Chairman Saylor stated in interviews and social media that the company continues to acquire this cryptocurrency. This counter-cyclical buying strategy demonstrates Saylor's firm belief in the long-term value of Bitcoin. However, opinions on this strategy are divided in the market. Supporters argue that it is a classic value investing strategy of “being greedy when others are fearful,” while critics worry that MicroStrategy might have accumulated too many positions at high levels, facing significant unrealized losses if Bitcoin prices fall further.

MicroStrategy's stock code listed on NASDAQ is MSTR, and its stock price has also dropped, falling more than 16% in the past five days, currently at $197.03 as of the time of publication. This decline is greater than Bitcoin's own 11% drop, indicating the leveraged nature of MicroStrategy's stock. As MicroStrategy holds a large amount of Bitcoin, its stock price fluctuations often amplify Bitcoin's price fluctuations. When Bitcoin rises, MSTR's stock price increase is usually 1.5 to 2 times that of Bitcoin; conversely, when Bitcoin falls, MSTR's stock price decline is also larger.

Last week, reports indicated that MicroStrategy's net worth fell below $15.7 billion, raising concerns among critics over Bitcoin wallet transfers. Some market observers questioned whether MicroStrategy was preparing for a potential Bitcoin sale. However, MicroStrategy officials denied these speculations, emphasizing that the wallet transfers were merely routine operations for security reasons.

Saylor vs Gold Bugs: The December Dubai Century Battle?

Last weekend, gold investor and outspoken Bitcoin critic Peter Schiff issued a challenge to Saylor, asking him to debate at the Binance Blockchain Week in Dubai in December. Schiff stated that MicroStrategy's “entire business model is a scam” and questioned the sustainability of the company's reliance on continuously issuing bonds and stocks to buy Bitcoin.

Schiff has long been a critic of Bitcoin, believing that gold is the true store of value, while Bitcoin is merely a speculative bubble with no intrinsic value. His main arguments include: Bitcoin has no practical use, its value relies entirely on market sentiment; the fluctuation of Bitcoin makes it an unreliable store of value; and the issue of Bitcoin's energy consumption.

As of the time of writing, Saylor seems to have not publicly responded to this challenge. Saylor has previously defended Bitcoin multiple times in public, but usually does not engage in one-on-one debates with critics. If this debate does take place, it will become one of the most highly anticipated events in the cryptocurrency space, as it represents a direct confrontation between two completely opposing philosophies of value storage.