MicroStrategy, the business intelligence firm that has become synonymous with aggressive Bitcoin accumulation, has added yet another massive tranche of the digital asset to its holdings. The move marks the eighth consecutive week of purchases, solidifying its position as one of the most prominent corporate Bitcoin holders globally. As the year 2024 comes to a close, the company’s Bitcoin strategy remains as ambitious as ever, despite growing scrutiny over its heavily leveraged approach.
The company revealed in a filing with the Securities and Exchange Commission (SEC) on Monday that it had acquired an additional 2,138 Bitcoin between December 23 and December 29. The purchase, amounting to approximately $209 million, was made at an average price of $97,837 per Bitcoin. With this latest acquisition, MicroStrategy now holds an astonishing 446,400 Bitcoin.
MicroStrategy just gobbled up 2,138 $BTC for $209M at an average price of $97,837!
With 446,400 $BTC total, their unrealized profit is a jaw-dropping ~$13.92B!
That’s some serious hodling. pic.twitter.com/eExzVCQsis
— SuZu | xAI 🙈🙉🙊 (@tripdefi) December 30, 2024
However, this aggressive buying spree hasn’t been without consequences. Shares of MicroStrategy, which were recently included in the Nasdaq 100 index, have faced significant volatility. Following the announcement of its latest Bitcoin acquisition, the company’s stock dropped over 6% during recent trading sessions. Bitcoin itself has seen a decline in price, trading around $92,500, down from its recent high of $99,000 and significantly below its all-time high of $108,000 reached earlier in the month.
🚨 MicroStrategy has increased its Bitcoin holdings to 446,400 BTC after purchasing an additional 2,138 BTC pic.twitter.com/DOr17GESKd
— 🌸 DigiGal (@DigitalGal_) December 30, 2024
The 21/21 Strategy: A Bold Vision or a Risky Gamble?
MicroStrategy’s latest Bitcoin purchase aligns with its ongoing “21/21” strategy. This plan involves raising $42 billion through the issuance of new shares and fixed-income securities, with the proceeds funneled into acquiring more Bitcoin. The company has been funding its acquisitions primarily through at-the-market (ATM) share sales.
While this strategy has allowed MicroStrategy to accumulate an unparalleled Bitcoin reserve, it has also raised concerns about its financial stability. Critics argue that the company’s reliance on leverage, including convertible notes and debt issuances, places it in a precarious position. As of December 30, MicroStrategy had sold nearly 593,000 shares during the preceding week to fund its Bitcoin purchases, further diluting its stock.
JUST IN: 👀 MicroStrategy acquires further 2,138 #Bitcoin for $209 million bringing total to 446,400 BTC. pic.twitter.com/EZ2EhUcwP4
— Crypto Panth (@CryptoPanth) December 30, 2024
The company’s bold strategy has been met with mixed reactions. While some see it as a visionary approach to capitalize on the long-term potential of Bitcoin, others warn of the risks associated with heavy leverage. Felix Hartmann, founder of Hartmann Capital, expressed his concerns in a December 30 statement, predicting that MicroStrategy’s stock price could eventually implode due to its aggressive leveraging tactics.
Market Reactions and Investor Concerns
MicroStrategy’s recent inclusion in the Nasdaq 100 index, alongside companies like Palantir Technologies and Axon Enterprise, was seen as a major milestone. However, the company’s stock has struggled to maintain momentum. On December 30, shares fell over 8% following the announcement of its latest Bitcoin purchase.
$MSTR stock fell below $300 in after-hours trading on Tuesday, dropping 46% since reaching a high in November.
This comes after the company presented a plan to print more shares in its proposed funding strategy worth $42B.
MSTR currently holds 446,400 $BTC. pic.twitter.com/kKroeFHyNr
— TheLordofEntry (@thelordofentry) December 31, 2024
The trading day began with the company’s stock priced at $318.89 but quickly dropped to $302.09 within the first hour. Despite a brief recovery, the stock closed at $302.96 and continued to decline in after-hours trading, settling at $293.59.
Market observers have pointed to the company’s reliance on leverage as a key concern. The Kobeissi Letter, a financial analysis resource, highlighted the risks associated with MicroStrategy’s plan to increase its authorized shares from 330 million to 10.33 billion. Such a move would allow the company to raise additional capital but could further dilute its stock value.
MicroStrategy does it again! Adding 2,138 BTC worth $209M to their stash, now holding a jaw-dropping 446,400 BTC! Is this the ultimate Bitcoin flex or what?#BTC #Tether #2138BTC pic.twitter.com/a3fsPErncE
— Binita Sengupta (@bseng48711) December 30, 2024
Joe Burnett, head of market research at Unchained, referred to MicroStrategy’s approach as “hyperbitcoinization.” He noted that the company’s ability to trade at a premium enables it to sell shares above net asset value (NAV), purchase more Bitcoin, and reduce leverage, creating a cycle that increases its Bitcoin-per-share ratio. However, this strategy depends on maintaining investor confidence, which could waver if Bitcoin prices continue to decline.
Hartmann offered a nuanced perspective on MicroStrategy’s future. While he acknowledged the risks of the company’s strategy, he also pointed out that a bullish Bitcoin market could enable MicroStrategy to leverage even further. In such a scenario, the company could easily repay its debts due in 2027–2029, especially if Bitcoin’s market capitalization surges.
“Within five years, MSTR will first become a top 5 company by market cap before eventually going bankrupt,” Hartmann said. However, he also admitted that the outcome could go the other way if Bitcoin experiences a significant bull run.
A Year of Highs and Lows
Despite the challenges, 2024 has been a transformative year for MicroStrategy. The company’s stock price has increased by 342.2% since January 1, reflecting the broader optimism in the cryptocurrency market. However, the past month has seen a 20.2% decline in the stock’s value.
As the year draws to a close, MicroStrategy remains a polarizing figure in the world of corporate Bitcoin investment. Its relentless accumulation of the cryptocurrency has made it a key player in the digital asset space, but it has also invited scrutiny over its financial practices.
