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KEY TAKEAWAYS
- MicroStrategy shares, which gained 24% on Monday, moved lower in premarket trading Tuesday after the Bitcoin development company announced a $600 million convertible senior notes offering to buy more Bitcoin.
- The company purchased an additional 3,000 bitcoins between Feb. 15 and Feb. 25, taking its total holding to 193,000 bitcoins.
- MicroStrategy’s 2021 high at $1,315 may become a future support area on the chart if the price continues its upward momentum.
MicroStrategy (MSTR) shares, which gained 24% on Monday, were down ahead of Tuesday’s opening bell after the Bitcoin development company company announced a $600 million convertible senior notes offering to purchase more of the cryptocurrency.1
The notes, which mature on March 15, 2030, will be offered to qualified institutional investors and available to convert into cash, shares of MicroStrategy’s class A common stock, or a combination of cash and shares of MicroStrategy’s class A common stock, the company said in a statement.1
MicroStrategy’s convertible debt offering allows it to capitalize on its high stock price, which has doubled since the start of the year and increased fivefold over the past 12 months, benefiting from a rapid appreciation in the Bitcoin price—an asset that commands the lion’s share of the company’s treasury.2 Bitcoin surpassed $68,000 on Monday, nearing its all-time high.
A recent regulatory filing revealed that the company holds 193,000 bitcoins at an average purchase price of $31,544 per bitcoin, placing the current market value of its holding at around $13 billion. That stash includes 3,000 bitcoins purchased between Feb. 15 and Feb. 25 for approximately $155.4 million, according to the filing.3
MicroStrategy co-founder and Executive Chairman Michael Saylor said on the company’s latest earnings call that he believes that Bitcoin will be driven by institutional investors over the next 15 years. “The next 15 years, I would expect, will be a regulated institutional, high-growth period of bitcoin,” he said.4
MicroStrategy shares have risen sharply since the 50-week moving average crossed above the 200-week moving average in January to form a bullish golden cross pattern. Moreover, trading volumes have remained elevated since mid-October, coinciding with Bitcoin’s bull run over the same period.
Although the stock climbed to a 24-year high on Monday, closing at $1,334.01, its 2021 peak at $1,315 still carries technical significance. If the price continues its upward momentum, this level may become a new support area that market participants want to test several times before potentially taking MicroStrategy shares higher.
MicroStrategy shares were down 7.1% at $1,240 at around 6:45 a.m. ET. Tuesday.
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As of the date this article was written, the author does not own any of the above securities.
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