Bloomberg News reported when MicroStrategy Inc started to buy Bitcoin in bulk in the summer of 2020, Michael Saylor, the chief executive officer, stated that it was because inflation would cause the cash to become worthless. The crypto pile accumulated since is worth $3.4 billion less towards the second quarter-end compared to the earlier one.
More on It
The drop is technically another paper loss under the US accounting rules for the enterprise software maker until the sale of any of the Bitcoin is sold. When it reports the results of the second quarter, it will require to take a substantial impairment charge. The stock slid 66% on Thursday when the quarter ended.
Saylor did not express much concern and continued to stick to the strategy adding to his last quarter’s stockpile as Bitcoin was experiencing the largest drop in price in more than 10 years. Bitcoin stash of MicroStrategy was worth approximately $5.9 billion towards the first quarter-end. It means that with Bitcoin finishing at about $18,900 on June 30th, the same pile, including some smaller purchases announced at June end, was worth approximately $2.45 billion, or about 59% less than what it was just 90 days ago.
Bloomberg News also reports that at the peak of the collapse of the crypto market, MicroStrategy bought about 480 Bitcoin worth $20,817 each. This was found out as per a filing of the company with the US Securities and Exchange Commission on Wednesday.
While some crypto-centric firms have included Bitcoin into their balance sheets, the blow many coins and many digital assets are facing in the prevailing bear market will compel any new participant in the crypto market to think twice before taking the plunge.
However, few participants still appear to worry less about the recent price drop and Saylor’s strategy.
Mark Palmer, who is associated with BTIG as the digital assets research head, stated that if their price target on MicroStrategy is seen, it is based on Bitcoin price reaching the $95,000 mark by the end of 2024. It may be mentioned that BTIG has a buy rating related to MicroStrategy with a target cost of $950.
Shares of MicroStrategy were found, ending the second quarter at $164.30. The stock surged as high as $1,272.94, as was seen in February 2021. It was found trading at $123.02 towards July 2020, just before Saylor started to purchase the Bitcoin.
Palmer also said that since there is a deterministic supply related to Bitcoin, only 21 million Bitcoins will be ever mined. He also revealed that this state of affairs means that Bitcoin price will be determined by demand, not supply-demand balance.
