MicroStrategy Adds 1,100 BTC to Its Treasury Amid a Prolonged Bitcoin Pull‑back
Crypto Markets Desk
February 8 2024
Executive summary
MicroStrategy, the enterprise‑software firm led by Bitcoin evangelist Michael Saylor, disclosed that it purchased an additional 1,142 BTC for roughly $90 million last week. The transaction pushed the company’s total Bitcoin holdings to 714,644 BTC, valued at about $54.35 billion. The average price paid on the latest deal—approximately $78,800 per coin—exceeds the firm’s overall cost basis of $76,056, meaning the new acquisition did not lower the portfolio’s weighted‑average price. The purchase occurred while Bitcoin has been trading well below $78,000 for several days, hovering in the $60‑$72 k range.
The move sparked a modest rally in MicroStrategy’s stock, which rose 26 % to close near $135 after slipping to the $107‑level earlier in the week. The episode also draws attention to broader market dynamics, including a declining Bitcoin Sharpe ratio and recent activity in the Ethereum ecosystem.
1. MicroStrategy’s latest Bitcoin buy‑in
According to a filing with the U.S. Securities and Exchange Commission, MicroStrategy’s treasury bought 1,142 BTC at an average price of $78,815 per coin. The purchase was executed despite Bitcoin’s price spending most of the week under that level and even briefly touching $60,000 on a leading exchange.
The added coins bring the firm’s cumulative exposure to 714,644 BTC, a figure that represents the largest public‑sector Bitcoin holding in the world. The total outlay for the entire position now stands at roughly $54.35 billion, establishing an overall average acquisition price of $76,056 per Bitcoin.
Because the latest purchase price is higher than the existing average, the transaction does not improve MicroStrategy’s cost basis. In other words, the firm’s “paper” position remains technically underwater while the market price lingers below the weighted‑average price.
2. Market backdrop – Bitcoin’s recent trajectory
Bitcoin’s price action over the past week has been decidedly bearish. After a brief dip below $78,000 on Tuesday, the digital asset failed to reclaim that threshold, finding support near $72,000. Coinbase data shows the cryptocurrency has spent the majority of the period trading in a $60‑$72 k corridor, a stark contrast to the $79 k level at which MicroStrategy entered its latest trade.
The price gap between the market and MicroStrategy’s average cost has widened, echoing a similar scenario the firm faced in 2022 when Bitcoin slipped below $30,000 while the company’s average purchase price lingered just above $30,600. Back then, MicroStrategy throttled its buying cadence but continued to acquire smaller amounts at sub‑cost prices.
Analysts note that buying above the cost basis in a down‑trend can be interpreted as a confidence signal, but it also raises the possibility of heightened unrealized losses if the price continues to drift lower.
3. Stock reaction – MSTR mirrors crypto volatility
MicroStrategy’s share price reacted sharply to the Bitcoin market swing. The stock touched a low of approximately $107 on Thursday, reflecting investor concern over the widening gap between the company’s Bitcoin holdings and the market price. Following a slight uptick in broader crypto sentiment on Friday, the shares rallied 26 % to close near $135, underscoring the tight correlation between the firm’s valuation and Bitcoin’s price movements.
4. Wider crypto market signals
Bitcoin Sharpe ratio
Recent data indicates that Bitcoin’s Sharpe ratio—a measure of risk‑adjusted return—has slipped to levels typically observed at market bottoms. A lower Sharpe ratio suggests heightened volatility relative to returns, reinforcing the notion that the current environment is challenging for risk‑averse participants.
Ethereum activity
In the same timeframe, Ethereum garnered attention after a high‑profile sale by co‑founder Vitalik Buterin, as highlighted in Cointelegraph’s “Hodler’s Digest.” While the exact size of the transaction was not disclosed, the move sparked discussion about the sentiment of prominent insiders toward ETH’s price trajectory. The incident coincided with a modest dip in Ethereum’s price, which has been hovering near the $1,650‑$1,700 mark this week, reflecting broader market pressures.
Crypto price indexes
Aggregate crypto price indexes, such as the CoinDesk Bitcoin Price Index (BPI) and the Crypto Market Cap Index, have both registered declines of roughly 8‑10 % over the past seven days. The downward pressure is not limited to Bitcoin; the top‑10 cryptocurrencies by market cap have collectively lost more than $150 billion in total market value since the start of the month.
5. Analyst perspectives
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Cost‑basis strategy: Some market observers argue that MicroStrategy’s decision to buy at a price above its average cost may be driven by a desire to maintain a steady “buy‑the‑dip” narrative, even if the dip is modest. Others view the move as a signal that the firm believes Bitcoin’s long‑term upside remains intact, regardless of short‑term price weakness.
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Liquidity considerations: MicroStrategy’s balance sheet, bolstered by the sizeable Bitcoin holding, provides a large liquidity buffer. However, the firm’s reliance on Bitcoin for a significant portion of its net assets means that prolonged price suppression could affect credit metrics and future financing options.
- Investor sentiment: The recent stock rally suggests that a segment of investors remains bullish on the prospect that Bitcoin could quickly recover, rewarding the company for its continued accumulation. Conversely, risk‑averse shareholders may be watching the widening unrealized loss with caution.
6. Key takeaways
| Insight | Detail |
|---|---|
| New acquisition | 1,142 BTC bought for about $90 M at $78,815 each. |
| Overall exposure | 714,644 BTC total, average cost $76,056 per coin. |
| Market context | Bitcoin has been trading $60‑$72 k, well below the new purchase price. |
| Cost‑basis impact | The latest purchase raises, rather than lowers, the weighted‑average price. |
| Stock movement | MSTR shares fell to $107, recovered to ~$135 (+26 %) after a modest crypto rebound. |
| Broader metrics | Bitcoin Sharpe ratio falls to bottom‑market levels; Ethereum sees notable insider sell‑off. |
| Investor outlook | The move signals confidence in Bitcoin’s long‑term upside, but also introduces larger unrealized losses if the downtrend persists. |
7. Outlook
If Bitcoin manages to break above the $78,000 threshold in the coming weeks, MicroStrategy’s average cost basis could begin to narrow, potentially improving the company’s balance‑sheet perception and supporting further equity gains. Conversely, a sustained dip below $70,000 would keep the firm’s Bitcoin portfolio in an unrealized loss position, likely putting additional pressure on its stock and amplifying calls for a more cautious acquisition strategy.
For investors tracking the macro‑crypto environment, the intersection of MicroStrategy’s buying decisions, Bitcoin’s risk‑adjusted performance, and notable activity in the Ethereum ecosystem will remain focal points in assessing market sentiment and potential turning points.
The information in this article is based on publicly available SEC filings, exchange price data, and market analyses as of February 8 2024. Readers are encouraged to conduct their own due diligence before making investment decisions.
Source: https://cointelegraph.com/news/saylor-strategy-1142-bitcoin-purchase-79k-per-btc?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
