MicroStrategy&039s Bitcoin Buy Draws Criticism

microstrategy has bought more bitcoins amid crypto market volatility as the firm’s leader continues to double down on the asset, though some market analysts have questioned the decision.

The business intelligence and software company bought an additional 480 bitcoins (btc) for approximately $10 million, an average price of $20,817 per bitcoin, according to a Wednesday filing.

Reading: Microstrategy average bitcoin price

microstrategy now owns nearly 130,000 btc ($2.61 billion), which it purchased for around $4 billion at an average price of $30,664.

the company has the largest btc reserve of any public company by far; tesla’s is the second largest with 42,902 btc ($862 million).

the price of bitcoin was about $20,000 at 1:30 p.m. ET, based on data compiled by blockworks: Down 3.1% from 24 hours ago, putting microstrategy 35% in the red on their bitcoin purchases YTD.

Morningstar Senior Research Analyst Madeline Hume said MicroStrategy’s latest buy shows the company is comfortable buying at a variety of price levels.

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The firm bought nearly 7,000 BTC last October and November, while Bitcoin was trading around $60,000, he noted. MicroStrategy CEO Michael Saylor revealed in April that he purchased an additional 4,167 BTC for approximately $190 million, an average price of around $45,700.

“This purchase does not release Saylor from the bench, as the price of bitcoin remains unchanged,” Hume told Blockworks. “the micro-strategy still remains nearly $1.4 [billion] underwater in its bitcoin reserves.”

microstrategy believes bitcoin’s recovery is near

Edward Moya, a senior market analyst at foreign exchange firm oanda, said it’s pretty clear the micro-strategy is betting on bitcoin and seeking as much capital as it can to offset the decline.

“The rapid appreciation before last year’s record high and the latest demise shows that the microstrategy has failed to capitalize on the road to the upside and find protection when the going got tough,” he told blockworks. “investors seeking exposure to cryptocurrencies should not consider micro-strategy as a good vehicle to do so, as they have proven to be reckless with their portfolio management.”

Fawad Razaqzada, Financial Markets Analyst at Stonex, said the purchase indicates Saylor believes the bitcoin downturn is coming to an end and a recovery is on the way.

“To a certain extent, I agree with that point of view,” added Razaqzada. “However, it does feel a bit like a gamble as prices have not stabilized to give you confidence that there is still a bottom. I hope that doesn’t scare investors who have shares in the company.”

microstrategy’s share price was $176.46 at 1:30 p.m. ET, down 5.2% from yesterday’s close, according to Google Finance. the stock is down about 68% since the beginning of the year.

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ben mcmillan, chief investment officer at idx digital assets, said that although microstrategy’s latest purchase is small compared to its previous purchases, it is consistent with larger so-called “whale wallets” looking to buy value at the tiers. current bitcoin.

“This news, however, comes along with the latest news of the [Three Arrow Capital] restructuring, potentially meaning a further forced sell-off of bitcoin,” McMillan added. “so the market is still waiting to see what other big sell-off events could be lurking around the corner.”

A court in the British Virgin Islands reportedly ordered three arrows capital, a crypto hedge fund firm dogged by rumors of insolvency in recent weeks, to liquidate its assets on Monday.

microstrategy’s latest purchase comes after chief security officer gary gensler said in an interview with cnbc on monday that while some crypto assets are securities, bitcoin is a commodity.

saylor linked a video of the interview on twitter, noting in a subsequent tweet that “bitcoin is the only investment grade currency”.

A microstrategy spokesperson did not immediately respond to blockworks’ request for comment.

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