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Shares of MicroStrategy Inc. (NASDAQ:MSTR) fell more than 8.5% on Monday, marking a rough debut to the fledgling term among the Nasdaq 100.
The software company and top corporate Bitcoin (CRYPTO: BTC) has struggled of late, registering its fifth losing session in the last six sessions and has tumbled more than 37% from its all-time high last month.
Why is MicroStrategy going down?
On Monday, MicroStrategy announced that it sold $561 million in common stock to purchase an additional 5,262 bitcoins at an average price of $106,662 per coin. This brings the company’s total Bitcoin holdings to a staggering 444,262 BTC.
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Still, both the size and timing of that purchase raised eyebrows among traders and analysts.
The last bitcoin purchase was Michael Sayloris the smallest yet. This is a stark contrast to the bold, big-ticket acquisitions that have defined its crypto strategy thus far.
The average price paid for the new bitcoin stash is approximately 12% above current levels. Even more tellingly, the price surpassed the December 17 record close of $106,151 for bitcoin — an unusual move for a company known for strategic buying on dips.
The critics did not hold back. Peter Schiffa well-known Bitcoin skeptic, hit out at Saylor on X, saying:
“Looks like you’re running out of firepower to keep supporting Bitcoin. Also, not only is this your smallest purchase, but it’s also the first time your average purchase price is above the market price on Monday when you disclosed the purchase.”
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Meanwhile, the market reaction reflects growing anxiety.
“$MSTR continues to look pretty heavy,” wrote X’s Markets & Mayhem account. “The ‘infinite money problem’ isn’t really a problem at all. It’s just trying to replace a failing core SaaS business with something that appeals to today’s high-beta speculators.”
A risky game of leverage
MicroStrategy’s deep ties to Bitcoin are both its crown jewel and its Achilles’ heel. With more than $41 billion worth of Bitcoin on its balance sheet as of December 2024, the company is inextricably linked to the volatile movements of the cryptocurrency market.
2024-12-25 18:00:41
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