MicroStrategy bought more Bitcoin as the cryptocurrency retreated from all-time highs – a key strategy for the company that also helped support the price of Bitcoin. However, JPMorgan’s Marko Kolanovic warned that these leveraged purchases could also make Bitcoin’s sharp decline worse and said cryptocurrency investors should proceed with caution. “MicroStrategy recently announced that it acquired more than $800 million in Bitcoin between February 26 and March 10, raising funds solely through the sale of convertible notes, indicating that the company is leveraging Bitcoin through its seemingly transformation Business, which also played a role, Kolanovich, the bank’s chief market strategist and co-head of global research, said in a report on Monday: He added: “In our view, these debt-financed Bitcoin purchases increase the potential for future The risk of severe deleveraging during a downturn, thus adding to the frothiness of the current cryptocurrency rally. MicroStrategy also bought 12,000 Bitcoins last week for nearly $822 million and another 9,245 Bitcoins this week for about $623 million, both times using proceeds from the sale of convertible notes. MicroStrategy on 3 It raised $604 million through the sale of converters on March 18 and raised another $800 million on March 8. The latest purchases mark a step up in MicroStrategy’s fourth-quarter purchases of more than $1 billion in Bitcoin. Accelerate. The company announced on Tuesday that it now holds a total of 214,246 Bitcoins. Microstrategy, originally an enterprise business software company, has been buying Bitcoin since 2020 and keeping it on its balance sheet. It primarily operates as Bitcoin Trading on proxies for price, it began venturing into the space in February this year, rebranding itself as Bitcoin Development Company. Kolanovic noted that momentum traders have been buying gold and Bitcoin futures in large quantities since February. Now, “If A downturn in crypto markets in the coming months could negatively impact gold,” the strategist said. While the Bitcoin rally late last year was catalyzed by cryptocurrency-specific factors, including expectations for the debut of a spot Bitcoin exchange-traded fund and the upcoming Bitcoin halving event in April, research suggests it may also be integrated more recently Gold’s rally – fueled gold’s rise. Positive sentiment towards risk assets and greater liquidity in cryptocurrencies. Kolanovic wrote: “To the extent that momentum traders… have been behind this futures impulse, the risk of mean reversion in gold and Bitcoin currently looks high given the extreme nature of the momentum signals.” vs. Bitcoin 52% MicroStrategy’s stock price is up 122% this year. Both started trading lower last week as investors began taking profits after Bitcoin hit a new all-time high. —CNBC’s Michael Bloom contributed reporting.
