MicroStrategy announced today that it has used nearly a billion dollars to acquire an additional 10,624 BTC, bringing its total Bitcoin holdings to 660,624 BTC.
The purchase occurs at a time when MicroStrategy's frontman, Michael Saylor, is under increased scrutiny. The company has faced significant pressure during the broader market's downward movement caused by Bitcoin's weak price development.
The accumulation continues as pressures increase.
Saylor has continued to expand MicroStrategy's Bitcoin holdings despite sustainable public scrutiny aimed at the company's approach.
The price of Bitcoin has declined over the past two months and has failed to recover to the $100,000 level that it lost in November, currently trading at around $89,950.
MicroStrategy, which is now virtually a Bitcoin-centric treasure trove instead of a traditional software company, has suffered significantly as its valuation moves in tandem with Bitcoin's volatility, creating ongoing headwinds.
Nevertheless, the company has continued to make new acquisitions. Specifically, it did not buy during the price drop that occurred last weekend when Bitcoin fell to $86,000, but announced its latest purchase when Bitcoin briefly rose to $90,615.
Some viewed the move as a way to excite supporters and maintain high morale among loyal investors. However, other analysts believe that MicroStrategy’s ability to finance future Bitcoin purchases is weakening.
Analyst Novacula Occami noted that in this latest round of purchases, MicroStrategy was only able to sell $44 million worth of preferred stock last week, which is a very small amount compared to previous capital acquisitions.
This suggests that the markets may be less willing to lend or buy their preferred equity.
As leveraging is becoming more difficult, MicroStrategy is moving back to issuing common stock. In this case, it sold 5.1 million MSTR shares at a price of $181 each, diluting the holdings of existing shareholders.
Given MicroStrategy’s current circumstances, this method may soon become unsustainable.
MicroStrategy experienced a severe dip in early December when its market value briefly fell below the net worth of its Bitcoin holdings. The event raised new concerns about leverage, liquidity, and investor confidence.
The stock price fell to $156, resulting in the company’s valuation dropping to $45 billion. At the same time, the value of MicroStrategy’s Bitcoin holdings was around $55.2 billion, marking an exceptional time when the markets valued the company lower than its assets.
MicroStrategy has since regained its position. However, if its stock trading were to fall below the value of its owned assets again, the issuance of new shares would become more difficult and less efficient.
As leverage dries up and the dilution of equity becomes less bearable, MicroStrategy may face a situation where it can no longer acquire enough capital to continue its accumulation model.
