MicroStrategy has purchased more bitcoin amid cryptocurrency market volatility, as the company’s CEO continues to bet big on the asset — though some market analysts have questioned the move.
According to a Wednesday filing, the business intelligence and software firm purchased an additional 480 bitcoin (BTC) for roughly $10 million — an average price of $20,817 per bitcoin.
MicroStrategy now owns nearly 130,000 BTC ($2.61 billion), which it purchased for approximately $4 billion at an average price of $30,664 per BTC.
The company has by far the largest BTC stash of any publicly traded company, with 42,902 BTC ($862 million).
According to Blockworks data, the price of bitcoin was around $20,000 at 1:30 p.m. ET, down 3.1% from the previous day, putting MicroStrategy 35% in the red on its bitcoin purchases to date.
Morningstar Senior Research Analyst Madeline Hume believes MicroStrategy’s latest acquisition demonstrates the company’s willingness to buy at various price levels.
She stated that the company purchased nearly 7,000 BTC in October and November of last year when bitcoin was trading at around $60,000 at the time. MicroStrategy CEO Michael Saylor revealed in April that he had purchased an additional 4,167 BTC for approximately $190 million — an average price of approximately $45,700.
“This buy doesn’t free Saylor from the hot seat as bitcoin’s price continues to trend flat,” Hume said. “MicroStrategy still remains nearly $1.4 [billion] underwater on its bitcoin reserves.”
MicroStrategy believes that a bitcoin recovery is near
Edward Moya, a senior market analyst for the foreign exchange company OANDA, says that it’s clear that MicroStrategy is all-in on bitcoin and is looking for any capital it can get to buy the dip.
“The rapid appreciation before last year’s record high and latest demise shows MicroStrategy has failed to capitalize on the way up and to find protection when things got ugly,” he explained. “Investors looking for crypto exposure should not consider MicroStrategy a good vehicle for that as they have proven to be reckless with their portfolio management.”
According to Fawad Razaqzada, a financial market analyst for StoneX, the buy indicates that Saylor believes the bitcoin downturn is coming to an end and that a recovery is on the way.
“To some degree, I agree with that viewpoint,” Razaqzada added. “It feels a bit like a gamble though as prices haven’t stabilized to give you confidence that a low is in just yet. I hope that doesn’t scare investors who are holding the company’s stock.”
Statistics from Google Finance show that MicroStrategy’s stock price was $176.46 at 1:30 p.m. ET, down 5.2% from the previous day’s close. Since the beginning of the year, the stock has dropped roughly 68%.
Ben McMillan, chief investment officer at IDX Digital Assets, commented that while MicroStrategy’s latest purchase is small in comparison to previous purchases, it is consistent with larger so-called “whale wallets” seeking to value-buy at bitcoin’s current levels.
“This news, however, comes alongside the latest news of the [Three Arrows Capital] restructuring, which potentially means more forced selling of bitcoin,” McMillan added. “So the market is still waiting to see what other big liquidation events might be lurking around the corner.”
On Monday, a British Virgin Islands court reportedly ordered Three Arrows Capital, a crypto hedge fund firm plagued by insolvency rumours in recent weeks, to liquidate its assets.
MicroStrategy’s latest acquisition comes after SEC Chair Gary Gensler told CNBC on Monday that, while some crypto-assets are securities, bitcoin is a commodity.
Saylor shared a video of the interview on Twitter, noting that “bitcoin is the only investment grade currency.”