Bitcoin Holdings Impacts Microstrategy Shares, Here’s Why
Although Microstrategy continues to have unrealized losses thanks to falling Bitcoin prices, it is affecting the company’s stock. Ahead of the company’s Q2 earnings next week, Jefferies downgraded it to underperform from hold. There may well be an update from Microstrategy on their plans for Bitcoin holdings.
What could be Microstrategy’s Bitcoin strategy in the near future?
In a recent report, Brent Thill, an analyst at Jefferies, said the company’s failure to execute business information influenced the decision. He added that an update on Microstrategy’s Bitcoin strategy is also expected from the company. This becomes even more critical amid a prolonged bear market sentiment we have seen in the crypto space in recent months.
“We expect an update on management’s intent to continue investing in Bitcoin. The disappointing coverage is due to MicroStrategy’s failure to execute on its business intelligence business amid a tougher macro backdrop.”
Meanwhile, the downgrade negatively affected the company’s share price in pre-market trading. The software company’s shares fell as much as about 6.50% in pre-market trading.
Michael Saylor’s Strong Belief in Bitcoin Changes Nothing for Micro-Strategy?
Michael Saylor, founder and CEO of Microstrategy, is a big fan of Bitcoin. He was on several occasions vocal in his support for the top cryptocurrency. Recently, Saylor predicted a massive price increase for Bitcoin in the long term. “As long as the price of Bitcoin doesn’t go to zero, it will go to a million,” he said in an interview last month.
Against this backdrop, it is highly unlikely that Saylor’s company would make many changes to its Bitcoin strategy. With a total of 129,918 BTC in possession, Microstrategy is the world’s largest institutional holder of Bitcoin. The company had at various stages over the last few years bought Bitcoin at an average price of $30,700. At the time of writing, the Bitcoin price stands at $20,964, down 0.30% in the last 24 hours and 4.32% in the last week, according to CoinMarketCap.
Last month, it was estimated that the company suffered an unrealized loss of over $1 billion due to the bear market. Despite such a loss, Saylor expressed confidence in Bitcoin, saying his company expected volatility and strategized accordingly.
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