MicroStrategy Buys More Bitcoin, Enters Nasdaq 100 Index

(Bloomberg) -- MicroStrategy Inc., which is set to enter the Nasdaq 100 Index on Monday, announced it had purchased an additional $561 million of Bitcoin at an average price near last week's record high.

MicroStrategy Inc., set to join the Nasdaq 100 Index on Monday, said it purchased an additional $561 million of Bitcoin at an average price near last week’s record high.

The Tysons Corner, Virginia-based dot-com-era software maker turned leveraged Bitcoin proxy has now disclosed seven weeks in a row of purchases.

MicroStrategy purchased 5,262 Bitcoin tokens at an average price of approximately $106,662 from Dec. 16 through Dec. 22, according to a filing with the US Securities and Exchange Commission on Monday. This is the fewest number of Bitcoin the company has bought in several weeks, as the price of the token reached a new high above $108,000 during the period of the purchases.

The Bitcoin treasury company aims to raise $42 billion of capital over the next three years through at-the-market stock sales and convertible debt offerings for the purpose of buying more Bitcoin. The company has already surpassed its capital goals for 2025 and co-founder and Chairman Michael Saylor told Bloomberg Television on Wednesday that MicroStrategy will revisit its plan and put in place a new plan once it’s completed.

When MicroStrategy first announced its capital plan in October, some observers thought it may have been aggressive, but now it seems like the company will be able to keep raising more funds, according to TD Cowen analyst Lance Vitanza, who has a “buy” rating on the stock.

“We haven’t even gotten to 2025 yet, and they’re two-thirds of the way through,” Vitanza said in an interview. “So I think for us it’s a surprise, but it’s less surprising this Monday than it was last Monday or the Monday before.”

Hedge funds have been driving some of the demand as they seek out MicroStrategy for convertible arbitrage strategies by buying the bonds and selling the shares short, essentially betting on the underlying stock’s volatility.

MicroStrategy’s shares fell 11% last week, driven by a drop in Bitcoin prices. The original cryptocurrency’s price fell after the Federal Reserve’s rate decision and 2025 rate cut forecast, declining to as low as $92,149 on Friday after hitting an all-time high of $108,316 earlier in the week.

MicroStrategy’s value remains reliant on its underlying Bitcoin holdings and their price. If Bitcoin were to have a prolonged downturn, it would present a risk for the company.

“This model only works if the asset, Bitcoin in this case, not only continues to appreciate, but continues to appreciate considerably faster than alternatives,” Vitanza said.