The biggest winner in the currency market? MicroStrategy’s diversified investment

MicroStrategy's Diversified Investment Proves to Be the Currency Market's Biggest Winner

Author: Phyrex, Binance Square Creator Source: X (Twitter) @Phyrex_Ni

Many friends are still struggling with whether it is a bull market now, including myself, we will all fall into the cognitive dilemma. In fact, whether it is a bull market or not is not important. As long as the price rises, the market sentiment will rise. Maybe from the perspective of the future, the past decade has been the beginning of a bull market. There are quite a few positive news about the market today, including the Fed’s pause in interest rate hikes and Powell’s interest rate final words. After Powell’s speech, the three major stock indexes and stock index futures in the United States all rose, and both the US dollar and US bonds fell. Except for the 20-year US Treasury bonds, all long-term US Treasury bonds have been broken through the 5% mark. The sentiment in the market has changed to the trend that the Fed will fully enter the trend of pausing interest rate hikes and expecting interest rate cuts to start in June 2024. And for the cryptocurrency market, there are also its own pros.

Actually, from the timing point of view, Powell’s speech ended around 3:30 in the morning. Although the operation of the cryptocurrency market has always been mainly after the US stock market closes, there was no significant reaction in the market after Powell’s speech, but suddenly rose after 4 o’clock in the morning. Even from the perspective of trading volume, the main trading volume is concentrated just after 4 o’clock. This time happens to be the time when MicroStrategy released its financial report. Although many friends think this is intentionally finding a reason, “There are not so many reasons for the price increase, Dogecoin pumping is enough,” I can’t say that this statement is wrong, but if you read the Western media reports in the early morning and saw Michael Saylor’s tweet released at 4:03 am, which had a reading of over 755,000 and nearly 2,000 retweets, the data that is being discussed across the entire network, then you can understand that the information is the main driving force behind the current rise.

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Indeed, from the financial report, MicroStrategy actually made a loss in the third quarter. But why can a loss-making information drive the entire cryptocurrency market to rise? There are two reasons. First of all, MicroStrategy’s financial report closed on September 30, 2023, which was less than $27,000 in BTC’s closing price at that time. Although it was a loss compared to the average holding of MicroStrategy, in just one month, the price of BTC has risen by 30% from the basis of $27,000. For MicroStrategy with an average cost of less than $30,000, it has a profit of over 15%. MicroStrategy represents the ultimate buying power of BTC in the market.

In the third quarter, MicroStrategy purchased 5,912 BTC for nearly $162 million, and after the end of the third quarter, in October, MicroStrategy purchased 155 more BTC for $5.3 million. The total holding has reached 158,400 BTC with a total cost of $4.69 billion and an average holding price of $29,586. This means that up to now, MicroStrategy’s book profit on BTC has exceeded $905 million, and the profit of a single BTC exceeds $5,000. Among these stocks, only 15,886 BTC were purchased through mortgages, slightly more than 10%, and the earliest batch of debts will mature in December 2025, totaling $650 million. MicroStrategy also thoughtfully marked the halving time of BTC in the financial report in the second quarter of 2024, which means that after the halving, BTC’s price is expected to rise again from a historical perspective. Even if it maintains the current price, MicroStrategy has sufficient capacity to repay the debt. However, the implication is also that MicroStrategy does not have plans to sell BTC before the halving cycle, but it may be different after the halving cycle. Of course, this might be something for 2025. And the rise of BTC will also drive the rise of MSTR. If MSTR rises, MicroStrategy will still sell more shares to buy BTC. This is probably a very rare hope for listed companies in the US to sell more shares.

In addition to the benefits brought by BTC itself, MicroStrategy has also ventured into the field of AI, launching MicroStrategy One. They have also entered the automotive industry, showing their support for AI. These are all welcomed by the traditional risk market and the cryptocurrency market. Especially when MicroStrategy announced their purchase of BTC in October, it gave a new impetus to the market. Unlike the Chinese community, MicroStrategy seems to have a curse that whenever they announce the purchase of Bitcoin, it “causes” the price of BTC to drop. Western investors, on the other hand, do not seem to pay too much attention to this issue. They actually consider MicroStrategy’s purchases as positive news for the industry. From what we can see, MicroStrategy may be the biggest winner in the cryptocurrency market.

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