The recent purchase from Microstrategy comes when BTC is under major selling pressure. Currently, the company holds 130,000 Bitcoins in its reserves with an unrealized loss of over $1 billion.
The company purchased this fresh lot as the BTC price has come under selling pressure ahead of the FOMC meeting on Wednesday. MicroStrategy bought these 301 Bitcoins at an average price of $19,851 per BTC. Company Chairman Michael Saylor announced that they “hold ~130,000 bitcoins acquired for ~$3.98 billion at an average price of ~$30,639 per bitcoin”.
MicroStrategy is one of the biggest corporate holders of Bitcoins and has been buying them since September 2020. Last month in August, Michael Saylor stepped down from the position of CEO and became the executive chairman of the company. As per the report, Michael Saylor will focus full-time on the company’s bitcoin acquisition strategy.
MicroStrategy is also looking to raise more funds to continue with its Bitcoin buying spree. Earlier this month in September, MicroStrategy filed a prospectus with the US Securities and Exchange Commission (SEC) to sell $500-million worth of Class A MSTR shares via investment banks Cowen & Co. and BTIG LLC.
The filing stated: “We intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement. We have not determined the amount of net proceeds to be used specifically for any particular purpose.”
As we can see, Bitcoin is trading at a 33% discount from the average holding price of MicroStrategy. Thus, the company is sitting at an unrealized loss of more than $1 billion as of date. If the Bitcoin (BTC) price falls further, the losses could amplify further. But the company has conveyed its intention to keep buying even at new lows.
Bitcoin Movement Ahead
Over the last two weeks, the Bitcoin (BTC) price has come under selling pressure slipping under $19,000 levels. This selling pressure comes on the backdrop of the FOMC meeting on Wednesday, September 21, when the Fed will supposedly announce a rate hike. Speaking to Bloomberg, John Toro, head of trading at digital-asset exchange Independent Reserve said:
“If the FOMC delivers less than a 100 basis points hike, it would make sense to see a small relief rally — this could be quite large if the FOMC were to deliver less than a 75 basis points increase, although this seems highly unlikely”.
Going ahead with a 100 basis points rate hike could induce more volatility in Bitcoin and the broader crypto market.