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When the History of Bitcoin is Written, This Story Will be in the Book

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Was MicroStrategy Trying to Cause Bitcoin’s Price to Change Direction?

With Bitcoin trading at $19,000, is it a buy? This is the big question crypto-traders and crypto-investors are asking themselves. While others are staring at their screens wondering, software company MicroStrategy (MSTR), the company that stared down a possible margin call on its $3.97 billion bitcoin stake a few weeks back, just put an additional 480 bitcoin (BTC.X) on the company books. 

The CEO, with board approval, holds an inordinate amount of bitcoins. The analytics software company with a $1.93 billion market cap owns so many that its stock trades in tandem with the price of the cryptocurrency.

On Wednesday (June 29), the company reported that it had purchased an additional 480 bitcoins for about $10 million at an average price of $20,817 per coin from early May to June 28. The updated position brings the company holdings to 129,699 bitcoins (BTC.X). Its average cost is $30,664 for a total acquisition cost of $3.98 billion. At $19,100. Per coin, the company holdings are worth approximately $2.477 billion.

During bitcoin’s latest leg down to the $18,000-$21,000 range, there was a lot of talk about whether MicroStrategy may begin to face margin calls. The company CEO Michael Saylor dismissed the chatter and indicated the company would purchase additional bitcoins as cash flow allowed.

In a recent Channelchek article titled, Cowboys
and Cryptocurrency
the question was asked, is the founder of this successful company a “cowboy” willing to take risks for the thrill of the ride. The new addition of even more bitcoin after the challenges his company was rumored to have faced a few weeks back, coupled with the overall dark clouds over crypto, might cause one to answer “yes,” he may have a penchant for risk-taking. But perennial “Gold Bug” Peter Schiff offers a different theory surrounding Saylor’s more recent $10 million bitcoin purchase.

Peter Schiff is a well-known critic of bitcoin. He has suggested that the MicroStrategy purchase was an attempt to cause a rally on the news. After the widespread rumors of MicroStrategy’s potential margin call, a strong show of support for the cryptocurrency, even if only $10 million, by Saylor, could have served as the push bitcoin needed to trade higher.

Bitcoin is down 60% year-to-date. This is double the losses in the tech-heavy Nasdaq which is down 29%. A sign of support from a big advocate and large holder had the potential to get something going, except the headwinds for many assets are strong.

Take Away

It would seem MicroStrategy and its founder are unrelenting in believing in the potential of bitcoin as sound money, and despite its loss of close to $10,000 per BTC on its total holdings, the firm is optimistic that the currency will prove itself superior. Once proven, it will pave the way for a bullish run. Or they could be wrong, and the company may eventually trade on other fundamentals.

Paul Hoffman

Managing Editor, Channelchek

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Sources

https://www.youtube.com/watch?v=v7_DJKkijLo

https://twitter.com/PeterSchiff/status/1542164209995337734

https://mises.org/power-market/3-common-criticisms-crypto-and-why-theyre-wrong

https://www.coindesk.com/podcasts/coindesks-money-reimagined/terraform-labs-ust-stablecoin-broke-the-buck/#:~:text=How%20the%20naysayers%20were%20right,why%20it%20matters%20for%20investors.


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