Microstrategy’s announcement of purchasing over half a billion dollars in Bitcoin has stirred excitement, yet historically, such news has often led to a short-term price drop in BTC. The pattern observed is that following Microstrategy’s buy announcements, a decrease in Bitcoin’s price frequently occurs, as witnessed just moments ago.
Recently, Michael Saylor announced that the company acquired an additional 14,620 BTC at an average price of $42,110, amounting to $615.7 million. This purchase expands their reserve to 189,150 BTC, valued at $5.9 billion, with an average cost of $31,168 per Bitcoin. Microstrategy’s MSTR shares, which are seen as an unofficial Spot BTC ETF, make this billion-dollar reserve significant.
For years, Saylor has been transforming his company into a structure based on Bitcoin, and investors are now holding MSTR shares in their portfolios as an alternative to a spot BTC ETF. This strategy has been embraced by BlackRock clients, who hold substantial MSTR shares, confirming the appetite for a spot Bitcoin ETF.
The implications of Microstrategy’s purchases are twofold. Firstly, it suggests an imminent price drop, which has already occurred, with BTC falling to $42,700 at the time of writing. Secondly, the company’s buying points have historically acted as strong local bottoms, indicating that BTC may not spend much time below the $42,110 level before climbing to new highs.