MicroStrategy Bitcoin Holdings: Should this be a Concern in the Crypto Industry?
MicroStrategy [MSTR] is a business intelligence software vendor that is a huge fan of Bitcoin and the crypto industry, mainly due to its executive chairman, Michael Saylor. MicroStrategy’s move to invest its resources in Bitcoin comes with mixed opinions. Some love that large institutions are finally taking the same interest in BTC as they have with other assets like gold.
On the other hand, critics point out the negative effects MicroStrategy Bitcoin holdings could have in the crypto industry. As a result, this article will delve into the overview of their Bitcoin holdings, their plans, and the negative impact MicroStrategy’s BTC arsenal might have on Bitcoin and the broader crypto industry. Let’s dive in!
Overview of MicroStrategy Bitcoin Holdings
MicroStrategy, the business software company led by Michael Saylor, took a very different turn from the traditional cash-storing method for many organizations. They decided to keep their money in Bitcoin and started buying large amounts of it. However, it is very important to point out that the journey toward MicroStrategy Bitcoin holdings started in August 2020 when they purchased around 21,454 BTC. Before the end of 2020, they had a whopping 70,470 Bitcoin in their possession, which made the crypto community know they were serious about holding the digital asset.
Regardless, Michael Saylor and his company had bigger plans, as they spent the whole of 2021 buying more Bitcoin. Their financial data shows they had about 124,391 Bitcoin at the end of 2021. In 2022, they didn’t make as many Bitcoin purchases as they had in previous years, which is why their total BTC holding at the end of that year was at 132,500 BTC.
Things will only get better in 2023, as they spent the rest of the year buying up Bitcoins at strategic times. According to their latest financial data, the company had around 189,150 BTC in its possession as of 27th of December 2023. Nevertheless, it is already at 190,000 BTC in 2024. In total, MicroStrategy Bitcoin Holding has an average purchase price of $31,224.00 per BTC with a total cost of $5.93 billion.
How Profitable is MicroStrategy Bitcoin Holdings
According to a recent presentation from the company, the data there shows that MicroStrategy is making massive profits from its Bitcoin purchases. Just in February 2024, the price of Bitcoin was around the $53k mark. Apparently, at this price, the total worth of the BTC in their possession was around $10 billion. At this rate, MicroStrategy was making massive profits from their Bitcoin holdings at more than $4 billion.
To understand better, it would be important to point out how much they spent purchasing these Bitcoins. According to the latest reports, the company had around 190,000 BTC in its possession. They had spent a total of $5.93 billion, or $31,224 per coin, getting these Bitcoins. With BTC having a 20% rally since the start of 2024, this helped push the profit of MicroStrategy Bitcoin holdings to a little over $4 billion. Since the executive of the company, Michael Saylor has emphasized many times that they are not selling any Bitcoin, this is still an unrealized profit. But the question remains. Is MicroStrategy selling its Bitcoin?
Is MicroStrategy Selling their Bitcoin?
In recent and past interviews with Michael Saylor, the executive chairman of MicroStrategy, the company is adamant about selling its Bitcoin. During an interview with Bloomberg in February 2024, Saylor mentioned that the company had no intention of selling its Bitcoin anytime soon. There’s a potential that the company might never sell its Bitcoin. “There’s no reason to sell the winner and buy the losers,” Saylor said during the interview.
While speaking on MicroStrategy’s (MSTR) bitcoin (BTC), he said that the approved spot Bitcoin ETFs reinforced their stance about selling their Bitcoin. “[The ETFs] are facilitating the digital transformation of capital, and every day, hundreds of millions of dollars of capital are flowing from the traditional analog ecosystem into the digital economy,” he added.
Another major reason behind MicroStrategy not selling their Bitcoin is that their executive chairman believes that the cryptocurrency is better than other digital assets. Saylor believes that while Bitcoin is in strong competition with gold, real estate, and even the S&P index, it is a much technically superior asset than them.
This is one thing that makes MicroStrategy Bitcoin holdings quite interesting, as crypto enthusiasts and those on the sidelines are constantly monitoring to see if they sell their BTC assets. This rise in acquisition however poses a bigger concern for a large company like MicroStrategy holding a massive amount of highly volatile Bitcoin.
The Bad Effects of Large Bitcoin Volume Held by MicroStrategy
Many critics have raised questions about the large number of Bitcoins in MicroStrategy’s possession and the effect it could have in the crypto industry. There are two major areas where critics and analysts point to centralization and liquidation risks.
- Centralization Concerns
One of the major intrinsic qualities of cryptocurrencies, especially Bitcoin, is decentralization, and there are fears that MicroStrategy purchases of Bitcoin might encroach on this. One company continuously amassing large amounts of Bitcoin without any signs of stopping is surely a bad sign. Moreover, Vetle Lunde, a research analyst at K33, pointed out how Bitcoin’s price tends to go down whenever MicroStrategy makes announcements of its Bitcoin purchases. But there’s even a greater risk, which is the potential of MicroStrategy liquidating their Bitcoin holdings.
- Risks of Liquidation
One of the major concerns of people is what could happen to Bitcoin and the entire crypto market if MicroStrategy should face any financial issues. Anything can happen to a company, and though slim, MicroStrategy is likely to go bankrupt. So, what happens when they decide to liquidate their entire Bitcoin holdings? If MicroStrategy decides to sell off all their Bitcoins at any moment, the effect will be so massive that it would take quite some time for the crypto market to recover. Moreover, BTC holder Henry Brade, co-founder of CoinMotion, says those having these concerns can only stop it if they stop selling their Bitcoins to MicroStrategy.
The Future of Institutional Investments in Bitcoin
In conclusion, there are many sides to Michael Saylor and MicroStrategy’s decision to invest large amounts of money in Bitcoin. Some support large institutions becoming interested in the apex cryptocurrency, while others are concerned about centralization. Saylor and his company began their Bitcoin collection officially in 2020, and they don’t look like they will be stopping anytime soon.
Moreover, investing or storing their resources in Bitcoin could influence other organizations to take the same path. Furthermore, the approval of the spot Bitcoin ETF has only made Bitcoin-related trades more accessible to individuals and organizations looking to take the path. There are many questions about what the impact on the crypto market could be when institutions like MicroStrategy decide to sell, but the answer can only be known when it occurs.
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