MicroStrategy Adds 301 BTC to Balance Sheet as BTC Drops Below $19,000

In Brief

• MicroSrategy buys 301 bitcoin, still believing in long time horizon.
• According to executive chairman Michael Saylor, this takes the company's tally to 130,000.
• Saylor believes that bitcoin is the answer to inflation as the Fed prepares to meet on Sep. 21, 2022.

MicroStrategy adds 301 bitcoins to its balance sheet, according to a Form 8-K filing with the Securities and Exchange Commission.

The Tysons Corner, Virginia, business intelligence software company purchased the bitcoin between Aug. 2, 2022, and Sep. 19, 2022, at roughly $19,851 each, spending $6 million of its excess cash. According to co-founder and executive chairman Michael Saylor, this purchase takes the company and its subsidiary’s bitcoin holdings to 130,000. MicroStrategy now holds almost $4 billion in bitcoin purchased at an average price of $30,639 per bitcoin. It has held bitcoin as its primary reserve asset since 2020.

Before this, the company bought 1,434 BTC in Dec. 2021 and 660 in Feb. 2022.

Saylor’s prints all over recent purchase
Following the announcement, bitcoin analyst Dylan LeClair admired MicroStrategy’s resolve despite the current crypto winter.

“Ton of respect in the conviction,” he tweeted. “But the cost basis would be lower if the deployment strategy came with some more patience,” he added.

Saylor’s time horizon for bitcoin has consistently been long. “If you are going to invest in #bitcoin, a short time horizon is four years, a mid-time horizon is ten years, & the right time horizon is #forever.”

Saylor stepped down as CEO in Aug. 2022 after the company reported a $918 million loss from its bitcoin holdings following the collapse of the TerraUSD stablecoin in May 2022. The losses came from a hefty impairment charge imposed on the company’s bitcoin stash. Accounting rules dictate that the company must sustain an impairment charge if the asset’s value declines within a quarter.

Former MicroStrategy CFO Phong Le took over the reins of CEO from Saylor in Aug. 2022 to run the company’s software business, while Saylor now drives MicroStrategy’s bitcoin-buying strategy.

Inflation hedge thesis still intact
Saylor has also been a proponent of bitcoin as the answer to rising inflation and currency devaluation. In Dec. 2021, the billionaire tweeted, “#Inflation is the problem and #Bitcoin is the solution.”

MicroStrategy started experimenting with bitcoin on Aug. 11, 2020, when the company spent $250 million from its $500 million in excess cash to buy bitcoin. At the time, Saylor saw it as a responsible way to carry out his fiduciary duties amidst increasing inflation.

With the U.S. economy running red-hot with over 8% inflation in Aug. 2022, Saylor may be thinking along the same lines with the recent bitcoin purchase.

“#Bitcoin offers hope to a nation beset with #Inflation,” he tweeted in Dec. 2021.

The Federal Reserve will announce an additional interest rate hike to curb inflation at the Federal Open Markets Committee meeting on Wednesday, Sep. 23, 2022. Most experts agree that it will be a 75-basis-point hike rather than a 100-basis-point hike since a 100-basis-point hike would likely have far-reaching implications for the stock market and possibly tip the U.S. economy into a recession.

Long-term, one expert believes that the only way to avoid a recession is if equities and risk assets like bitcoin first go down.

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