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Bitcoin (BTC) prices jumped above $70,000 earlier this week, hitting a new all-time high for the first time since the 2021 crypto bull run. The recent rise of the world’s largest cryptocurrency has been warmly welcomed by the crypto community. Still, perhaps no one is celebrating more than Michael Saylor, the man behind a company that holds the title of the world’s largest corporate investor in Bitcoin.
Bitcoin price is rising
On Monday, Bitcoin price hit a new record high of $72,910 as its meteoric rise shows no signs of stopping.
BTC, by far the largest crypto asset, has regained investor attention after nearly a dozen new spot Bitcoin exchange-traded funds (ETFs) were approved earlier in the year and there was optimism that the Federal Reserve would soon follow suit interest rate cuts could begin.
Investments in the top 10 U.S. spot Bitcoin exchange-traded funds fell slightly to a two-week low in the week ending March 8, but still totaled nearly $2 billion, according to LSEG data.
“Bitcoin started the week on a strong note, dragging the entire crypto market higher,” said Nick Cawley, strategist at DailyFX.
With Bitcoin’s supply capped at 21 million coins, investors are scrambling to join the ongoing bull market before the April “halving” that will further restrict supply.
This event, which occurs every four years, halves the number of new coins entering the market and halves the reward for mining them, which has historically caused the price of Bitcoin to rise.
Michael Saylor’s MicroStrategy buys more Bitcoin
The rise in Bitcoin price to a new all-time high came shortly after MicroStrategy Incorporated (NASDAQ:), an enterprise software maker founded by Michael Saylor, made another significant investment in the flagship cryptocurrency.
According to filings with the SEC, the company purchased 12,000 BTC tokens for $821.7 million, marking the second-largest purchase since it began investing in the crypto coin nearly four years ago.
This latest investment expands the company’s Bitcoin portfolio to approximately 205,000 tokens valued at over $14 billion. The purchase, conducted from February 26 to March 10, was funded primarily by proceeds from MicroStrategy’s recent $800 million convertible bond sale.
Under Saylor’s leadership, the business intelligence firm turned to Bitcoin in 2020 as a strategy to hedge against inflation and as an alternative to cash reserves.
In the first quarter of 2024 alone, the company’s investment in Bitcoin exceeded $1 billion, surpassing half of last year’s total spending. Since Saylor began Bitcoin acquisitions, the cryptocurrency’s value has increased by approximately 675%.
Additionally, MicroStrategy’s entry into Bitcoin has significantly boosted its share price, which has risen over 1,000% since the strategic shift. The company’s market value is now around $25.7 billion, surpassing its peak in March 2000.
The company’s average purchase price per Bitcoin is now $33,706, with the last batch purchased costing an average of $68,477 per token.
What do analysts say about Microstrategy?
Following the new Bitcoin investment, analysts at Canaccord Genuity said that the company’s aggressive Bitcoin purchases are “providing even more growth” for MicroStrategy.
The broker raised the stock’s price target to $1,810.
While MicroStrategy funded its Bitcoin acquisitions in the second half of 2023 and earlier this year primarily through stock sales via at-the-market (ATM) offerings, the company opted to diversify its financing approach by expanding its entire capital structure the issuance of a convertible note, Canaccord analysts said.
“Similar to how implementing debt can result in higher balance sheet returns on equity, purchasing these additional Bitcoins via a converter helped increase MSTR’s equity value premium relative to its BTC HODL to approximately 86%, according to our sum of the parts ( SOTP analysis,” they wrote.
“We also attribute this record-high premium to the rising BTC spot, where volatility is driving demand for MSTR options,” analysts added.
They noted that MSTR’s practice of issuing shares at a premium to acquire more Bitcoin could positively influence the stock price.
This observation was made through a detailed analysis that included a hypothetical scenario in which the company sells $500 million worth of shares to buy Bitcoin, benefiting from an 86% premium in its SOTP valuation.
“According to our analysis, such a purchase will result in a price increase of approximately $23 per share,” the Canaccord team wrote.
“The fact that MSTR has developed such a Bitcoin acquisition model at all, while small in percentage terms, is notable and works, at least for now,” they added.
Bitcoin prices have already risen more than 70% this year, while shares of MicroStrategy have posted a triple-digit gain of 142% over the period.
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