On Monday, the price of Bitcoin surged to a new peak of $72,910, continuing its remarkable upward trajectory without any signs of slowing down.
BTC, the dominant cryptocurrency, regained significant investor interest following the approval of nearly a dozen fresh spot bitcoin exchange-traded funds (ETFs) earlier in the year, coupled with optimism surrounding potential interest rate cuts by the Federal Reserve.
Investments in the top 10 U.S. spot bitcoin exchange-traded funds experienced a slight decline to a two-week low in the week leading up to March 8, accumulating close to $2 billion, as per LSEG data.
Nick Cawley, a strategist at DailyFX, remarked, “Bitcoin has started the week on a positive note, lifting the entire crypto market with it.”
With Bitcoin’s limited supply of 21 million coins, investors are rushing to participate in the ongoing bull run ahead of the upcoming “halving” event in April, which is expected to further reduce the coin supply.
This event, occurring every four years, reduces the rate of new coin issuance and halves the mining reward, historically resulting in a price surge for Bitcoin.
The recent surge in Bitcoin’s price to an all-time high closely followed a substantial investment by MicroStrategy Incorporated (NASDAQ:MSTR), a software company founded by Michael Saylor, in the leading cryptocurrency.
SEC filings revealed that the company acquired 12,000 BTC tokens for $821.7 million, marking its second-largest purchase since entering the crypto market nearly four years ago.
This latest investment increased MicroStrategy’s Bitcoin portfolio to around 205,000 tokens, valued at over \(14 billion. The acquisition, carried out between Feb. 26 and March 10, was primarily funded by the proceeds from the company’s recent \)800 million convertible note sale.
Under Saylor’s leadership, MicroStrategy turned to Bitcoin in 2020 as a hedge against inflation and an alternative to holding cash reserves.
In the first quarter of 2024 alone, the company’s Bitcoin investments surpassed $1 billion, exceeding half of the total spent last year. Since initiating Bitcoin acquisitions, the cryptocurrency’s value has surged by approximately 675%.
MicroStrategy’s foray into Bitcoin significantly revitalized its stock price, which has soared over 1,000% since the strategic pivot. The company’s market capitalization now stands at about $25.7 billion, surpassing its peak in March 2000.
The company’s average acquisition price per Bitcoin currently stands at \(33,706, with the latest batch purchased at an average of \)68,477 per token.
Following the new Bitcoin investment, analysts at Canaccord Genuity suggested that MicroStrategy’s aggressive Bitcoin purchases could lead to further value accretion for the company.
The brokerage firm raised the stock’s target price to $1,810.
While MicroStrategy initially financed its Bitcoin acquisitions through equity sales via At the Market (ATM) offerings towards the end of 2023 and the beginning of this year, it diversified its financing strategy by utilizing its complete capital structure through a convertible note issuance, as noted by Canaccord analysts.
The analysts highlighted that MSTR’s practice of issuing equity at a premium to acquire more Bitcoin could have a positive impact on its share price.
Their analysis indicated that such a purchase could drive approximately $23 per share in price accretion, showcasing the effectiveness of MicroStrategy’s Bitcoin acquisition model.
Bitcoin prices have surged by over 70% this year, while MicroStrategy’s shares have witnessed a remarkable triple-digit gain of 142% during the same period.