© Reuters
prices (BTC) blasted past the $70,000 handle earlier this week, touching a new all-time high for the first time since the crypto bull run in 2021. The latest upswing in the world’s largest cryptocurrency has been warmly welcomed by the crypto community. Yet, arguably, no one is celebrating more than Michael Saylor, the man behind a company that holds the title of the world’s largest corporate investor in Bitcoin.
Bitcoin price surges
On Monday, Bitcoin price touched a new record high of $72,910 as its meteoric rise shows no signs of stopping.
BTC, by far the largest crypto asset, has won back investor attention following the approval of nearly a dozen fresh spot bitcoin exchange-traded funds (ETFs) earlier in the year, and optimism that the Federal Reserve may soon begin lowering interest rates.
Investment in the top 10 U.S. spot bitcoin exchange-traded funds saw a slight dip to a two-week low in the week leading up to March 8, yet it still amassed nearly $2 billion, according to LSEG data.
“Bitcoin has kicked off the week on a high note, pulling the entire crypto market up along with it,” said Nick Cawley, a strategist at DailyFX.
With Bitcoin’s supply capped at 21 million coins, investors are scrambling to join the ongoing bull run before April’s “halving” event, which is set to further constrict supply.
This event, occurring every four years, slashes the rate of new coins entering the market and the reward for mining them in half, historically giving Bitcoin’s price a boost.
Michael Saylor’s MicroStrategy buys more Bitcoin
The Bitcoin price surge to a new all-time high came just after MicroStrategy Incorporated (NASDAQ:), an enterprise software maker founded by Michael Saylor, made another significant investment in the flagship cryptocurrency.
According to filings with the SEC, the company purchased 12,000 BTC tokens for $821.7 million, marking its second-largest buy since it started investing in the crypto coin nearly four years ago.
This latest investment boosts the company’s Bitcoin portfolio to approximately 205,000 tokens, valued at over $14 billion. The purchase carried out from Feb. 26 through March 10, was funded primarily by the proceeds of MicroStrategy’s recent $800 million convertible note sale.
Under Saylor’s leadership, the business intelligence firm turned to Bitcoin in 2020 as a strategy to hedge against inflation and as an alternative to cash reserves.
In the first quarter of 2024 alone, the company’s investment in Bitcoin exceeded $1 billion, surpassing half of the total spent last year. Since Saylor initiated Bitcoin acquisitions, the cryptocurrency’s value has soared by approximately 675%.
Moreover, MicroStrategy’s venture into Bitcoin has notably rejuvenated its stock price, which has climbed over 1,000% since the strategic shift. The company’s market value now stands at about $25.7 billion, surpassing its peak in March 2000.
The company’s average acquisition price per Bitcoin is now $33,706, with the latest batch purchased at an average of $68,477 per token.
What analysts are saying about Microstrategy?
In the aftermath of its new Bitcoin investment, Canaccord Genuity analysts said the company’s aggressive Bitcoin buys “beget even more accretion” for MicroStrategy.
The broker raised the target price on the stock to $1,810.
While MicroStrategy primarily financed its Bitcoin acquisitions in the latter part of 2023 and the beginning of this year through equity sales via At the Market (ATM) offerings, the company chose to diversify its financing approach by leveraging its complete capital structure through the issuance of a convertible note, Canaccord analysts said.
“Importantly, much like how putting debt to work can drive higher balance sheet returns on equity, purchasing this additional bitcoin via a convert has helped drive MSTR’s equity value premium relative to its BTC HODL to approximately 86% according to our sum of the parts (SOTP) analysis,” they wrote.
“We also attribute this record-high premium to surging BTC spot where volatility drives more demand for MSTR options,” added analysts.
They noted that MSTR’s practice of issuing equity at a premium to acquire more Bitcoin could positively influence its share price.
This observation was made through a detailed analysis, which included a hypothetical scenario where the company sells $500 million in stock to purchase Bitcoin, benefiting from an 86% premium in its SOTP valuation.
“The bottom line here, according to our analysis is that such a purchase drives ~$23 per share in price accretion,” Canaccord’s team wrote.
“While small on a percentage basis, the fact that MSTR has created such a bitcoin acquisition model in the first place is noteworthy and that it is working, at least currently,” they added.
Bitcoin prices are already up more than 70% this year, while MicroStrategy’s shares witnessed a triple-digit gain of 142% during that period.