Will MicroStrategy Stop Buying Bitcoin Someday?

Bittime - Discover MicroStrategy's strategy of buying Bitcoin, the reasons behind the decision, and the risks and opportunities ahead. Will they stop?

MicroStrategy, a business intelligence software company known for its aggressive strategy of buying Bitcoin (BTC), currently owns about 0.75% of the total Bitcoin circulating in the world.

With 152,800 BTC worth $4.53 billion or $29,672 per Bitcoin, MicroStrategy continues to demonstrate its commitment to the buy-and-hold strategy. However, many are wondering, will the company stop buying Bitcoin in the future?

MicroStrategy's strategy: Why Keep Buying Bitcoin?

Since adopting its Bitcoin acquisition strategy in August 2020, MicroStrategy has shown no signs of stopping its purchases. In fact, the company regularly buys Bitcoin in both bull and bear markets. For example, it made a large purchase of 12,333 BTC worth $347 million between April and June 2023, as well as an additional 467 BTC in July 2023.

According to Matthew Weller, Global Head of Research at StoneX, MicroStrategy's strategy is based on the belief that Bitcoin is a superior store of value compared to fiat currencies that continue to devalue. CEO Michael Saylor also emphasized that the company is using its excess cash as well as proceeds from capital markets to continue accumulating Bitcoin.

However, this decision is not without risk. The dependence on the relationship between the price of BTC and MicroStrategy shares is one of the main factors in determining the timing of purchases.

Also read: The Latest Facts About Bitcoin Overheating and Its Impact on Investors

When Can MicroStrategy Stop Buying or Even Sell Bitcoin?

According to analyst Lance Vitanza from TD Cowen, MicroStrategy will likely only sell Bitcoin in emergency situations, such as an urgent need for operating capital, tax payments, or debt repayment.

Currently, the company has $2.2 billion in debt, with half of it due in 2025. If the financing market deteriorates and there are no funding alternatives, they may be forced to sell some Bitcoin.

However, selling Bitcoin just for profit does not seem to be part of MicroStrategy's plan. Their strategy is rooted in the long-term belief that Bitcoin will continue to increase in value as fiat currencies devalue.

Future Challenge: Bitcoin Spot ETF

One of the big risks to MicroStrategy's strategy is the potential launch of a spot Bitcoin ETF. If approved by the US Securities and Exchange Commission (SEC), the ETF could attract investors who have been buying MicroStrategy shares as an indirect way to gain exposure to Bitcoin.

Although CEO Michael Saylor is optimistic that the ETF will only expand the market and create new opportunities, the risk of losing some institutional investors remains. This could affect the company's stock valuation, given the relatively slow growth of its core software business.

Conclusion

Will MicroStrategy stop buying Bitcoin one day? Based on their current strategy, the answer seems to be no-unless they face significant financial pressure.

With a strong belief in Bitcoin's long-term potential and a well-designed strategy, MicroStrategy continues to be a pioneer in Bitcoin acquisitions among public companies. However, they should also be prepared for challenges, including competition from spot Bitcoin ETFs that could drastically change the crypto investment landscape.

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