Microstrategy Wants To Use $42 Billion to Further Boost Its Bitcoin Holdings
1min read Microstrategy is increasingly becoming a key player in the Bitcoin market, currently holding Bitcoin valued at about $43 billion, accounting for about 2.2% of the total Bitcoin supply.
In a filing with the U.S. Securities and Exchange Commission on Monday, Microstrategy hopes to increase the authorized number of Class A common shares and preferred shares to raise more funds to purchase Bitcoin.
This has also driven the price of Bitcoin to rise on Thursday. Bitcoin price shortly rebounded to $98,046, up 0.15% for the day. Other smaller tokens have also seen a rebound, with the CMC100 index, which measures the broad index of cryptocurrencies, up 3% from the beginning of the week.
Sean McNulty, director of liquidity provider Arbelos Markets, said that Microstrategy's announcement of issuing more shares next year to buy Bitcoin has pushed up the price of Bitcoin. The market is optimistic about Microstrategy's Bitcoin purchase behavior, which is the biggest reason for the market's rise.
Microstrategy announced earlier this week that it has purchased an additional $561 million worth of Bitcoin at an average price close to last week's historical high, marking the company's seventh consecutive week of purchasing the token.
So far this year, the price of Bitcoin has risen by 135%, outperforming the returns of most global stocks and traditional investments like gold. This has also driven a significant increase in Microstrategy's stock price, with a gain of over 420% so far this year.
The company's latest plan is to raise $42 billion to continue hoarding Bitcoin, with $21 billion from stock issuance and another $21 billion from fixed-income securities, hence the company's 21/21 plan.
The goal of the plan is also quite clear, that is, to use all possible financial leverage to maximize its holdings of Bitcoin, thereby ensuring its pioneering position in the Bitcoin field. However, this ambitious idea has also led some critics to believe that it will cause concerns among traditional investors, as the scale and speed of diluting equity are clearly not the mainstream market.
In addition, some traders have warned that the market may experience volatility due to a large number of expiries in Bitcoin and Ethereum derivatives contracts.
Some believe that Friday could be Schrödinger's time, when the derivatives exchange Deribit's open interest contracts will reach a record $43 billion, including $13.95 billion in Bitcoin options and $377 million in Ethereum options. Some analysts are concerned that market makers may unwind their hedges and short Bitcoin on Friday, leading to significant volatility.
