MicroStrategy has purchased $1.5 billion worth of Bitcoin, while Marathon Digital Holdings is raising $700 million to extend its Bitcoin purchases. 

MicroStrategy’s acquisition adds 15,400 bitcoins to its portfolio, bringing its total holdings to 402,100. The company now owns nearly 2% of the capped 21 million bitcoin supply.

Public Companies Continue an Extensive Trend of Bitcoin Purchases

This purchase further extends MicroStrategy’s lead as the largest corporate Bitcoin holder. In November alone, the company purchased over $12 billion worth of BTC. The latest acquisition was completed at an average price of $95,976 per bitcoin. 

Despite this move, MSTR stock prices fell nearly 1% during Monday trading. However, its year-to-date gains have mirrored Bitcoin’s performance, surging by nearly 500% so far this year. This rally recently placed MicroStrategy among the top 100 public companies in the US. 

Since its first Bitcoin purchase in 2020, Saylor has advocated for companies to use Bitcoin as a treasury reserve asset. He also recently suggested Microsoft’s board of directors and its CEO Satya Nadella to invest in Bitcoin, saying that Microsoft should be powered by digital capital. 

Earlier in October, Microsoft’s board urged its shareholders to vote against a proposal that suggested that the company diversify its portfolio through Bitcoin. 

“There’s a pretty low supply of Bitcoin over the counter, so you have a supply shortage, and if Bitcoin moves above $100,000, there will be a big chase. I’m still confident that Bitcoin is going to close much higher before year-end, well above $100,000. It’s just a matter of time,” Entrepreneur Thomas Less said on CNBC today. 

Meanwhile, Bitcoin mining firm Marathon Digital Holdings (MARA) announced a $700 million private offering of 0% convertible senior notes due in 2031. The offering, subject to market conditions, will target institutional investors under the Securities Act.

The notes, classified as unsecured senior obligations, will not bear interest. At the company’s discretion, they may be converted into cash, MARA common stock, or a combination of both.

MARA plans to allocate $50 million from the proceeds to general corporate purposes, including Bitcoin purchases, capital expenditures, and other growth initiatives. Additionally, part of the funds will go toward repurchasing its 2026 convertible notes to optimize its capital structure.

These developments highlight the growing interest in Bitcoin as a strategic asset among publicly traded companies. These firms are demonstrating an extremely bullish outlook for the leading cryptocurrency. Pantera Capital even predicted BTC to reach $740,000 by 2028. 

Crypto investment inflows experienced a sharp contrast last week, dropping to $270 million, signaling a slowdown after consecutive weeks of strong activity.

Year-to-date inflows have reached a record $37.3 billion, reflecting the continued growth of institutional interest in cryptocurrencies despite market volatility.

Crypto Inflows Drop Amid Profit Booking

Bitcoin faced significant outflows of $457 million last week, marking the first notable retreat since early September. It comes after a series of positive flows into digital asset investment products as BTC reached new highs. Specifically, crypto inflows reached $3.12 billion the prior week.

The impact of macroeconomic trends also played a role. Two weeks ago, inflows hit $2.2 billion as optimism surrounding a Republican sweep in US elections and a softer stance from the Federal Reserve buoyed investor sentiment.

However, momentum appears to be fading. Following the initial post-election rally, inflows have moderated. Last week’s figures also reflect a significant pullback compared to the $1.98 billion seen immediately after the elections. CoinShares’ James Butterfill attributes the selloff to profit-taking after Bitcoin approached the $100,000 psychological level.

“We believe is profit taking following bitcoin testing the very psychological level of $100,000,” Butterfill wrote.

Meanwhile, experts have divided Bitcoin’s outlook. Pessimistic analysts, including prominent figures like former Wall Street quant Tone Vays, forecast further downside.

Vays disclosed his decision to exit all long positions at $97,800, reflecting caution among seasoned traders. The analyst expressed skepticism about Bitcoin sustaining its $100,000 breakthrough this year.

“Still think sustaining a $100,000 break this year is unlikely.  Will be more than happy to be wrong OR Buy the Dip sub for $90,000! Might even consider a short,” he expressed.

Conversely, more optimistic views persist. Fundstrat’s Tom Lee remains bullish, projecting Bitcoin to reach $250,000 by the end of 2025. However, Lee’s team acknowledges potential short-term setbacks, with some expecting a dip to $60,000 before resuming its upward trajectory.

Robert Kiyosaki, the author of Rich Dad Poor Dad, echoed this sentiment but highlighted that any dip is a buying opportunity for long-term accumulation.

“Bitcoin is stalled short of $100,000. That means BTC may crash to $60,000. If and when that happens, I will not sell,” Kiyosaki stated.

While Bitcoin faced outflows, Ethereum recorded a massive $634 million in inflows, signaling renewed investor confidence in the asset. Ethereum’s YTD inflows have reached $2.2 billion, supported by a growing shift in sentiment as traders pivot to altcoins amid Bitcoin’s short-term uncertainty.

The crypto exchange-traded products (ETPs) market saw a drop in trading volumes, declining to $22 billion last week from $34 billion the week before.

Even with the introduction of options on US ETFs (exchange-traded funds), their effect on overall market volumes has been limited. This development raises concerns about the level of sustained institutional interest in these financial instruments.

An analyst broke down the strategy behind the aggressive Bitcoin acquisition being done by MicroStrategy which is gaining attention because of the rising price of the alpha crypto.

Anthony Pompliano, Founder & CEO of Professional Capital Management, understood the mathematical reason behind the company’s investment move but also warned that any investment is exposed to potential risks.

MicroStrategy’s Bitcoin Acquisition

Pompliano said that MicroStrategy is making a bold move to buy more Bitcoin and build up its crypto reserve by using convertible debt to finance the cryptocurrency’s acquisition.

The investment firm offers its shares at a higher price than the current price per share to generate funds for its Bitcoin acquisition.

Pompliano explained that MicroStrategy is selling future equity at a 55% premium to help the company buy more Bitcoin, saying that is a financially attractive move, saying, “This strategy makes sense from a financial perspective.”

Image: Crypto Economy

The analyst said that it is a beneficial strategy for MicroStrategy because it allows the investment firm to gain significant capital which the company is now using to buy a lot of the leading crypto, saying that this approach makes sense mathematically.

The Bitcoin Investment Plan

In October this year, MicroStrategy announced that it would be conducting a Bitcoin shopping spree by raising $42 billion in new capital in the next three years to finance its goal of buying more BTC.

Some analysts consider this Bitcoin investment strategy as a bold move being eyed by the investment firm.

Bitcoin market cap currently at $1.92 trillion. Chart: TradingView.com

According to the company’s executive, the objective of MicroStrategy’s capital-raising approach is to get $21 billion in fresh capital from equity offerings and generate another $21 billion from fixed-income securities between 2025 and 2027.

As of September 2024, MicroStrategy is already the largest Bitcoin holders among the publicly traded companies worldwide. Buying more of the crypto would further boost its position at the top spot among public companies.

Image: Theya Blog

Associated Risks

Pompliano understood the appeal of the Bitcoin proposition, saying that the move could be lucrative for the investment company.

However, the analyst pointed out that investors must not overlook the risks associated with such investments, saying anyone who wants to embrace MicroStrategy’s approach should understand the risks before dipping their feet into it.

“Now, the counterweight to that is there’s a hell of a lot of people I see saying nothing can go wrong. I’m not in that camp,” he said.

Pompliano explained that the investment firm’s strategy is not foolproof, saying that some people assumed that nothing could derail the investment plan.

“I couldn’t sit here and tell you what can go wrong, but what I can tell you is that an alarm goes off in my head when I start seeing everyone saying nothing can go wrong,” he expressed.

He pointed out there are volatility risks when people invest in Bitcoin, adding that the uncertain regulatory environment could amplify the risks associated with the aggressive purchasing of BTC.

Featured image from Canva, chart from TradingView