Microstrategy Buys Another $616M BTC —Bitcoin Price Reaction Explained

Insights:

• Bitcoin (BTC) price tipped for an imminent rally after Microstrategy announced the purchase of another 14,620 BTC for $616 million on Boxing Day.
• Historical trends show that the last 3 tranches of Mictrostrategy purchases have been promptly followed by a significant BTC price uptick.
• On-chain data points highlight the key resistance level that Bitcoin bulls have to clear to capitalize on Microstrategy’s latest accumulation.MicroStrategy Bitcoin BTC

Bitcoin (BTC) price has held firm above the $42,000 support level following Microstrategy’s announcement of its latest purchase of 14,620 BTC for $616 million on Boxing Day. On-chain analysis explores how this significant accumulation could impact Bitcoin price action in the days ahead. 

Will it propel Bitcoin price out of the current consolidation phase to make another attempt at the $50,000 target? 

Microstrategy Invests Another $616 million in Bitcoin Despite 30% Unrealized Profits 

MicroStrategy Inc. is Nasdaq-listed software company (NASDAQ: MSTR) led by billionaire co-founder Michael Saylor. On Dec 27, Saylor announced in a Twitter(X) post that the firm has further expanded its Bitcoin portfolio.

As detailed in a recent U.S. Securities and Exchange Commission (SEC) filing, the Tyson, Virginia-based company strategically acquired an additional 14,620 BTC between November 30 and December 26, amounting to approximately $616 million, averaging around $42,110 per Bitcoin.

The boxing day acquisition announcement officially brings MicroStrategy’s total Bitcoin holdings to 189,150 BTC, valued at $8.1 billion based on current market price (~$42,500). This solidifies the firm’s status as the largest corporate holder of the pioneer cryptocurrency. 

Microstrategy Bitcoin Profits Hits 36% After Latest $616 Million Purchase 

The company’s aggressive Bitcoin investment strategy was initiated by Michael Saylor on August 11, 2020, with an initial investment of $250 million in the cryptocurrency. 

Since then, MicroStrategy has consistently increased its Bitcoin holdings, with Saylor championing the digital currency as “digital gold” and a superior alternative to holding cash. 

Following the latest acquisition tranche, MicroStrategy’s average purchase price per Bitcoin is $31,168, according to historical accumulation data. As depicted in the chart below, the firm now sits on 35.58% unrealized profits worth approximately.

In effect, the firm would make $2.11 billon profits if the entire portfolio were liquidated a the the current Bitcoin prices. But during recent media rounds, the Saylor emphasized plans to add more funds to Microstragegy’ Bitcoin portfolio in the future. 

Since the firm began buying BTC in 2020, Saylor has vociferously advocated that Bitcoin is part of its long-term investment strategy. He has often backed BTC to yield better returns for shareholders and to hedge against inflation.

In reaction to the announcement, the Microstrategy stock price has jumped 11% within 48 hours. MSTR was trading at $660 at press time on Dec 28, up from $604 closing price on Dec 26.

While MicroStrategy’s Bitcoin portfolio has only hit 34% profits, the companies stock has fared much better. Since the firm’s foray in to Bitcoin investing in 2020, the MSTR stock price seen a substantial rise of over 320%.

Notably, MicroStrategy is not the only public company with significant exposure to Bitcoin in form of direct investments. Tesla (TSLA) is another major company with significant Bitcoin investment, currently holding 9,720 BTC, valued at $417 million, as per latest company filings.

Forecast: How Will Bitcoin Price React to Microstrategy’s Purchase? 

Based on the historical data trends provided by SaylorTracker.com, Bitcoin price has entered double-digit rallies, within 14-days after each of the last three Microstrategy acquisitions. If that pattern reocccurs, Bitcoin holders can anticipate a significnant uptick toward the $50,000 territory in the days ahead. 

However, for Bitcoin bulls to be confident of a $50,000 retest, the must first overturn the initial resistance at the $43,620 area. 

IntoTheBlock’s In/Out of the Money around Price data groups the current Bitcoin holders according to their entry prices. As seen below, 2.09 million Bitcoin holders acquired 909,230 BTC at the maximum price of $43,623. 

If those holders book profits as they break even, BTC price could struggle to breakout in the short-term. But if Bitcoin price can scale that resticance, it could open the doors to a $50,000 retest as predicted. 

On the downside however, the $42,190 support level could prove daunting for the bears.

Michael Saylor, details his ideology about Bitcoin in the exclusive interview below.