MICROSTRATEGY EFFECT

How does the periodic investment of MicroStrategy in Bitcoin affect its price?

The world’s largest corporate Bitcoin holder apparently drags down the price of the premier digital asset with every buy

MicroStrategy is a business intelligence company that made headlines in 2020 for its significant investment in Bitcoin. The company’s CEO, Michael Saylor, has been a vocal advocate for Bitcoin and publicly stated that he believes it is a better store of value than traditional assets like gold. MicroStrategy’s (MSTR) Bitcoin holdings are significant, and the company has been steadily adding to its position over the past year.

As of March 2023, the company holds 138,955 Bitcoins — worth billions of dollars at current market prices. According to Saylor’s recent announcement, MicroStrategy not only made a repayment at a 22% discount on its $205m Silvergate loan but also bought an additional 6,455 BTC for $150 million. This brings the company’s total BTC grand total to the figure quoted above — acquired for some US$4.14 billion, at an average price of US$29,817 per Bitcoin.

The biggest investor in any asset class usually results in an increased demand for the underlying asset — sending a message to other…