MicroStrategy Purchased 5,262 BTC Despite Growing Skepticism About the Company's Strategy

MicroStrategy has made headlines again by purchasing 5,262 BTC for approximately $561 million at an average price of $106,662 per BTC.

MicroStrategy has made headlines once again with its latest BTC purchase. The company acquired 5,262 BTC for approximately $561 million at an average price of $106,662 per BTC. This brings MicroStrategy's total BTC holdings to 444,262, acquired at a total cost of approximately $27.7 billion, with an average purchase price of $62,257 per BTC.

The company also announced impressive returns of 47.4% since the beginning of the quarter and 73.7% since the beginning of the year. However, some skepticism is growing about MicroStrategy's strategy.

It is believed that to sustain its purchases, MicroStrategy raises capital through methods such as issuing convertible and corporate bonds, securing credit lines and selling shares. This cycle appears to operate as follows: shares are sold to acquire the cryptocurrency, and the rising price per BTC increases asset value, enabling further loans, which are then reinvested in more Bitcoin purchases.

Some observers are warning that a significant decline in Bitcoin's price or MicroStrategy's stock could trigger a cascade effect. A sharp fall in MSTR shares would weaken the collateral backing its loans, potentially leading to forced asset sales, including BTC. This scenario could exert downward pressure on the broader cryptocurrency market, as the company now holds 2.2% of the global Bitcoin supply.

Thus, while some view Michael Saylor’s approach as a bold bid to cement the cryptocurrency's role in the financial system, others see it as unsustainable. History offers a cautionary note: in 2000, MSTR shares surged to $333 before plummeting 99%, a collapse that took 24 years to recover from.