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Bernstein Analysts Unveil the MicroStrategy “Miracle”: How Can They Buy So Much…
Bernstein Analysts Unveil the MicroStrategy “Miracle”: How Can They Buy So Much Bitcoin?
How is MicroStrategy, the company with the largest Bitcoin holdings in the world, able to acquire such a significant amount of BTC?
Author:
Mete Demiralp
18.06.2024 – 19:26
Update:
18 hours ago
0
In the world of cryptocurrency, the software company MicroStrategy (MSTR) continues to make waves. According to a research report released today by Bernstein, the company is not only converting its corporate treasury into cryptocurrency but also leading the way in the Bitcoin (BTC) capital markets.
Analysts Gautam Chhugani and Mahika Sapra pointed out that MicroStrategy is the only company that has successfully created institutional demand for Bitcoin-related convertibles.
To date, MicroStrategy has raised an astonishing $4 billion in convertible bonds specifically for the purpose of purchasing more Bitcoin. A convertible bond is a type of debt security that can be converted into shares. Currently, under the leadership of Michael Saylor, the company holds 214,400 BTC valued at approximately $14.5 billion. The company began acquiring BTC as a reserve asset in 2020. The authors emphasized that “No other company has an active BTC investment strategy that can attract capital on a large scale.”
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According to analysts, MicroStrategy’s long-term convertible debt strategy provides enough time to take advantage of a potential increase in Bitcoin’s price while minimizing the risk of liquidation for the cryptocurrency on its balance sheet.
Microstrategy has a unique approach to managing its finances. When Bitcoin prices rise, the company has more flexibility to issue new bonds. Conversely, when the value of crypto declines and leverage increases, the firm may issue new shares to reduce leverage, as noted by Bernstein.
*This is not investment advice.
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