Bitcoin prices (BTC) surged past the $70,000 mark earlier this week, reaching a new all-time high for the first time since the cryptocurrency bull run in 2021. The significant uptick in the value of the world’s largest cryptocurrency has been met with enthusiasm from the crypto community. However, perhaps no one is more ecstatic about this milestone than Michael Saylor, the individual responsible for a company that holds the title of being the world’s largest corporate investor in Bitcoin.
Bitcoin price surges
On Monday, the price of Bitcoin soared to a new record high of $72,910, continuing its remarkable ascent without showing any signs of slowing down. Bitcoin, as the largest cryptocurrency by far, has regained investor attention, especially after the approval of nearly a dozen new spot bitcoin exchange-traded funds (ETFs) earlier this year. Additionally, optimism has grown surrounding the possibility of the Federal Reserve implementing interest rate reductions.
Investment in the top 10 U.S. spot bitcoin exchange-traded funds experienced a slight decrease to a two-week low in the week leading up to March 8, although it still amassed nearly $2 billion, according to data from LSEG.
Nick Cawley, a strategist at DailyFX, commented, “Bitcoin has kicked off the week on a high note, pulling the entire crypto market up along with it.”
With Bitcoin’s supply limited to 21 million coins, investors are eager to participate in the ongoing bull run before the upcoming “halving” event scheduled for April. This event is expected to further restrict the cryptocurrency’s supply, adding to the urgency among investors to capitalize on the current market momentum.
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 surge in Bitcoin’s price to a new all-time high coincided with MicroStrategy Incorporated (NASDAQ: MSTR), an enterprise software maker founded by Michael Saylor, making another substantial investment in the flagship cryptocurrency. According to filings with the SEC, the company acquired 12,000 BTC tokens for $821.7 million, marking its second-largest purchase since it began investing in the cryptocurrency nearly four years ago.
This latest investment elevates MicroStrategy’s Bitcoin portfolio to approximately 205,000 tokens, valued at over $14 billion. The purchase, executed from Feb. 26 through March 10, was primarily funded by the proceeds of MicroStrategy’s recent $800 million convertible note sale. Under Saylor’s leadership, the business intelligence firm embraced Bitcoin in 2020 as a strategy to hedge against inflation and as an alternative to cash reserves.
In the first quarter of 2024 alone, MicroStrategy’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%.
MicroStrategy’s foray into Bitcoin has significantly revitalized its stock price, which has surged 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?
Following its latest Bitcoin investment, analysts at Canaccord Genuity remarked that MicroStrategy’s aggressive purchases of the cryptocurrency are likely to yield further gains for the company. Consequently, the brokerage raised its target price on MicroStrategy’s stock to $1,810.
While MicroStrategy had primarily financed its previous Bitcoin acquisitions through equity sales via At the Market (ATM) offerings, the company diversified its financing approach by utilizing its entire capital structure through the issuance of a convertible note. According to Canaccord analysts, this move is akin to putting debt to work to drive higher balance sheet returns on equity.
The analysts noted that MicroStrategy’s strategy of issuing equity at a premium to acquire more Bitcoin could positively impact its share price, especially in the context of surging Bitcoin spot prices. Through a detailed analysis, Canaccord’s team outlined a hypothetical scenario where the company sells $500 million in stock to purchase Bitcoin, leveraging an 86% premium in its sum of the parts (SOTP) valuation. This analysis suggested that such a purchase could drive approximately $23 per share in price accretion.
Although the potential price accretion may seem modest on a percentage basis, Canaccord emphasized the significance of MicroStrategy’s Bitcoin acquisition model and its effectiveness in driving shareholder value, particularly in the current market environment where Bitcoin prices have surged by over 70% this year, and MicroStrategy’s shares have experienced a triple-digit gain of 142%.