MicroStrategy Buys $786M in Bitcoin — What Does It Say About BTC Price in 2024?

NOIDA (CoinChapter.com)— MicroStrategy Inc. has once again attracted attention with its aggressive Bitcoin acquisition strategy. In its latest move, the company purchased 11,931 BTC for approximately $786 million between April 27 and June 19, financed through the sale of convertible notes.

This substantial acquisition marks MicroStrategy’s third-largest Bitcoin purchase (in USD) to date, though in terms of the number of BTC tokens purchased, it was about the seventh-largest.

Bitcoin’s Journey to the Latest Purchase

MicroStrategy’s latest acquisition comes at a time when Bitcoin’s price trajectory is of keen interest to investors and analysts. Historically, MicroStrategy’s large Bitcoin purchases have had varied impacts on BTC prices.

For instance, following the acquisition of 21,454 BTC on Aug.11, 2020, Bitcoin’s price experienced a slight dip but initiated a longer-term uptrend. The Dec. 21, 2020, purchase of 29,646 BTC saw a substantial price surge within a week, highlighting the positive market sentiment triggered by significant institutional buys.

The more recent acquisitions, such as the 10,500 BTC purchase on March 10, 2024, led to a price rise from $72,025 to $74,150 in a week. However, the rally did not last long as traders started booking profits.

The historical pattern suggests that while MicroStrategy’s purchases can cause short-term volatility, they generally contribute to long-term bullish trends.

Microstrategy Bitcoin
BTC price action after previous MicroStrategy purchases. Source: Tradingview.com

According to a filing with the US Securities and Exchange Commission, the company acquired the 11,931 BTC at an average price of around $65,900 per Bitcoin. This purchase follows a significant acquisition of 12,000 BTC for $821 million in March 2024.

Throughout 2024, MicroStrategy has spent over $2.4 billion on Bitcoin, bringing its total holdings to 226,331 BTC, valued at approximately $14.9 billion. Despite spending $8.3 billion in total, the company boasts an impressive 80% paper gain on its investments.

If Bitcoin chooses to repeat history, BTC prices are likely to gear up for a bull run, possibly to a `new ATH.

I hope Warren Buffett noticed Bitcoin’s potential for appreciation in the long term.

Market Shares MicroStrategy’s Outlook on Bitcoin

Michael Saylor, the chairman and co-founder of MicroStrategy, has been a vocal advocate for Bitcoin as a strategic asset. Saylor began accumulating Bitcoin in 2020, viewing it as an inflation hedge and a superior alternative to holding cash.

Since then, Bitcoin has risen approximately 600%, underscoring the validity of his strategy. Saylor’s conviction remains strong, as evidenced by the continued acquisitions funded through various financial mechanisms, including convertible notes.

MicroStrategy’s strategy of leveraging debt to acquire Bitcoin signals a long-term bullish outlook on the cryptocurrency. The significant paper gains support the perspective, while indicators suggest the wider market shares MicroStrategy’s bullish view on BTC prices.

Microstrategy Bitcoin
BTC Futures Open Interest.

A consistent increase in Bitcoin’s open interest correlates with a rising BTC price. The trend indicates growing investor confidence and higher capital inflows into Bitcoin futures, which are typically precursors to price increases.

The open interest reflects heightened market participation and speculative interest, reinforcing the positive sentiment around Bitcoin.

Microstrategy Bitcoin
BTC OI-Weighted Funding Rate.

The open interest-weighted (OI-weighted) funding rate remains positive despite short-term fluctuations. A positive OI-weighted metric signifies that traders are placing more bullish bets, indicating that the majority of open interest is held by those expecting price rises.

The sustained positive sentiment among traders suggests a robust underlying confidence in Bitcoin’s future performance.

The increasing open interest and the positive OI-weighted indicator highlight the potential for further price appreciation. These metrics reflect a bullish sentiment among traders and investors, suggesting that Bitcoin may experience continued growth and upward momentum soon.

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