MicroStrategy, a company involved in software development, has made a cash purchase of $615.7 million worth of Bitcoin. This decision was taken with the firm expectation that the prime US regulators would finally grant their consent to a spot Bitcoin exchange-traded fund (ETF).
In a regulatory filing made between November 30 and December 26, the firm and its affiliates bought 14,620 Bitcoins at an average price of around $42,110. The company’s shares witnessed an upward trend of 8% in recent trading. In 2023 itself, MicroStrategy has seen a jump of 350%, whereas Bitcoin has gone up by almost 160%.
MicroStrategy’s decision to purchase Bitcoin to hedge its reserve assets has boosted the attractiveness of the company’s stock, which often moves in the same direction as the digital asset.
In the general opinion of analysts at TD Cowen, on the part of MicroStrategy, this is a futuristic move with the understanding that Bitcoin will prove to be of higher value. They believe the company has caught the attention of investors seeking to venture into the Bitcoin space.
Of late, regular filings, such as those of finance stalwarts like BlackRock, have been responsible for, in a way, pulling up the crypto markets, despite the closure of companies like Sam Bankman-Fried’s FTX.
A spot crypto ETF, on the other hand, will have the capability to be updated with the asset’s market value. This will facilitate connections between investors and the token, eliminating the need for them to acquire the currency.
MicroStrategy began purchasing cryptocurrencies in 2020 and now owns about 189,150 Bitcoins purchased for nearly $5.9 billion through its affiliates. According to their plans, their Bitcoin investments are geared toward long-term holdings, and they will continue to purchase and accumulate the most sought-after cryptocurrency on a global scale.
Given that there is a limited supply, the value of Bitcoin rises if acceptance rises. It is also capable of acting as a hedge fund in the event of future inflation.