MicroStrategy Paying Heavy Price for decline in Bitcoin, lost USD 30 Billion

The crypto market has gained momentum since Donald Trump’s victory in the US presidential election earlier this month. The price of Bitcoin, the largest cryptocurrency in terms of market value, has continuously made new highs. However, there has been a big fall in its price in the last four days. Due to this, MicroStrategy, an enterprise software firm with heavy investments in Bitcoin, has suffered a loss of about $30.

Recently Bitcoin made a high of more than $99,000. After this its price has decreased significantly. This has led to a decline of about 35 percent in the market capitalization of MicroStrategy. This is a loss of approximately $30 billion for the company. MicroStrategy’s shares have risen nearly 599 percent in the last one year. In comparison, the price of Bitcoin has increased by about 146 percent. Last week, retail investors had invested about $100 million in MicroStrategy shares. However, questions are also being raised regarding the company’s investment strategy in Bitcoin.

Last week, MicroStrategy purchased approximately 55,000 bitcoins worth approximately $5.4 billion. In a filing with the US regulator SEC, MicroStrategy had said that it had bought bitcoins worth about $5.4 billion between November 18 and 24. An average price of $ 97,862 per bitcoin has been paid for this. MicroStrategy had said that it has used funds received from the sale of shares and convertible notes for this purchase.

This company already has a larger reserve of Bitcoin. However, this is its biggest purchase of Bitcoin in terms of amount since December 2020. Michael Saylor, Chairman of MicroStrategy, decided to invest in Bitcoin to hedge against inflation. Initially this company used to buy bitcoins in exchange for cash. Since then, MicroStrategy has been using the proceeds from the sale of shares and convertible debt to buy Bitcoin. The price of Bitcoin had increased due to Trump’s victory in America and the arrival of crypto supporting candidates in Congress. This political change has increased the possibility of better regulatory conditions for the crypto market.