Bitcoin is currently trading 3.5% down from today’s high of $51,500 following MicroStrategy’s announcement that it had purchased more than $1 billion worth of Bitcoin.
MicroStrategy CEO Michael Saylor revealed that the Bitcoin was purchased at an average price of $52,765, taking the company’s overall holdings of BTC up to 90,531 ($4.44 billion).
Whilst many would expect this news to have a bullish reaction, the market immediately sold-off as it suppressed rumours that MicroStrategy was yet to buy after it raised $1 billion in the form of an unsecured loan last week.
Despite rallying alongside Bitcoin’s increase in value earlier this year, MicroStrategy’s share price is 43% down from its peak of $1,320 on February 8.
MicroStrategy has purchased an additional ~19,452 bitcoins for ~$1.026 billion in cash at an average price of ~$52,765 per #bitcoin. As of 2/24/2021, we #hodl ~90,531 bitcoins acquired for ~$2.171 billion at an average price of ~$23,985 per bitcoin. $MSTRhttps://t.co/FbsRYhXEhn
— Michael Saylor (@michael_saylor) February 24, 2021
The high risk and potentially high reward approach from MicroStrategy has not yet converted to many other companies with the exception of Tesla and Square, with the former investing $1.5 billion in January.
This may be due to the volatile nature of cryptocurrencies in general, with market cycles being susceptible to 80% drawdowns once the hype and euphoria around respective bull markets subside.
At the time of writing Bitcoin is trading at $49,450, a stark contrast to this time last year when Bitcoin was valued at $10,000 before it crashed to $3,800 in March.
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