MicroStrategy Shares Fall Amid $516 Million Bitcoin Buy and Nasdaq-100 Entry

MicroStrategy unveiled a $561 million Bitcoin purchase Monday, topping off its corporate coffers using stock sale proceeds as the firm’s stock debuted in the Nasdaq 100-index.

Selling 1.3 million shares over the past week, MicroStrategy said it used the proceeds to expand its Bitcoin holdings by 5,200 BTC, according to a SEC filing. 

The self-described Bitcoin development company now sits on a trove of 444,262 BTC, valued at $42 billion as of this writing. Since the Tyson, Virginia-based firm began stacking Bitcoin in 2020, it has become the world’s largest corporate holder of the asset and set a model that many other firms have started following.

MicroStrategy’s latest acquisition represented the seventh consecutive Monday that the firm signaled it had bought Bitcoin, purchasing a total of 192,000 BTC since Nov. 11, according to Saylor Tracker. That sum was valued at around $18 billion, as of this writing.

While MicroStrategy has been scooping up Bitcoin for quite some time, Monday’s announcement came at a historic time for the company, which was founded in 1985. Encompassing the top 100 non-financial companies listed on the Nasdaq Stock Index, such as Apple and Nvidia, MicroStrategy was added to the Nasdaq-100 index earlier this month. 

MicroStrategy’s shares officially began trading as part of the index Monday.

Michael Saylor, co-founder and executive chairman of MicroStrategy, wrote on X (formerly known as Twitter) Monday that the firm’s latest purchase took place at an average cost of around $106,600 per Bitcoin. When the firm embarked on its Bitcoin-buying blitz after Election Day, the firm started off by paying around $74,400 per Bitcoin.

MicroStrategy's inclusion in the benchmark was widely lauded by Bitcoin enthusiasts, but Bloomberg ETF Analyst James Seyffart previously said the stock’s inclusion could have significant implications. Earlier this month, he wrote in a research note that the shift could result in the net buying of at least “$2.1 billion in shares by ETFs.”

Bitwise Senior Investment Strategist Juan Leon told Decrypt that flows from passive and active managers could juice MicroStrategy's trading volume, causing it to trade 20% to 40% more on a given day.

"That would have a substantial impact on price," he said, positing that the stock could have 50% or more greater upside on days with positive flows, now that it's included in the Nasdaq-100 benchmark

The price of Bitcoin peaked at an all-time high of $108,000 last week but has since dipped to $93,700 following hawkish comments from the Federal Reserve. The U.S. central bank, adopting a cautious tone on inflation, said it would cut interest rates at a slower pace in the new year.

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When Bitcoin hovered near its record price, Saylor compared Bitcoin to Manhattan’s real estate sector, adding that the company “will just keep buying the top forever.”

Using convertible notes, the company has been able to effectively buy Bitcoin on leverage. Yet analysts have noted that MicroStrategy’s strategy isn’t without risk, focusing on the sizable premium at which MicroStrategy’s shares trade compared to its Bitcoin holdings.

As Bitcoin has fallen below the $100,000 mark, MicroStrategy’s stock price has likewise tumbled. Not long after Monday’s opening bell, MicroStrategy shares traded down 6% at $342, notching a 17% dip over the past week.

Edited by Andrew Hayward

Editor's note: This story was updated after publication to include an analyst comment.