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MicroStrategy Chairman Michael Saylor's Bitcoin buying strategy may be coming into question as the introduction of BTC exchange-traded funds (ETFs) seems to be near.
Saylor began purchasing Bitcoin in 2020, citing the necessity to lower the company's cash holdings due to the projected threat of inflation. The transition occurred when revenue from the software business remained stagnant.
Saylor, who later resigned as CEO in the past year, said he would concentrate on the Bitcoin component of the company's dual strategy.
Tomiwabold OlajideFollowing a crucial court loss earlier this year, the U.S. Securities and Exchange Commission (SEC) appears poised to approve ETFs that invest directly in Bitcoin, prompting investors and analysts to question whether MicroStrategy's shares will continue to fetch a premium.
According to Bloomberg, MicroStrategy's recent filing somewhat raised the question.
Since the middle of 2020, Saylor has amassed more than $5.5 billion in Bitcoin. During that time, MicroStrategy's stock more than tripled as the value of Bitcoin increased.
Based on estimates, MicroStrategy's shares trade at a 30% premium to the company's enterprise value due to its 158,245 Bitcoin holdings as of September.
According to an analytical perspective reported by Bloomberg, if the SEC authorizes the ETFs in the following months, the premium for MicroStrategy shares might drop to a range between 15% and 25%.
While the introduction of ETFs may spark a rally in Bitcoin's price, an analyst believes that this will offset a reduction in the premium by increasing the MSTR share price.
Between Aug. 1 and Sept. 24, MicroStrategy purchased 5,445 bitcoins for roughly $150 million. To fund the purchase, the company issued and sold a total of 403,362 MSTR shares.
Alex Dovbnya
Vladislav Sopov
Dan Burgin