Billionaire Saylor’s MicroStrategy Takes On $205 Million Loan To Buy More Bitcoin As Experts Eye $50,000 Price
Billionaire Michael Saylor’s MicroStrategy recently announced that it had taken out a $205 million loan from Square and Goldman Sachs to purchase more Bitcoin. The loan comes as the company has invested billions of dollars in the cryptocurrency and is estimated to own around 90,000 bitcoins, worth more than $1 billion. Several experts are also predicting that the price of Bitcoin could reach $50,000 in 2021.
In this article, we will look at this loan’s details and the implications for MicroStrategy and the Bitcoin market.
Overview of MicroStrategy and Bitcoin
MicroStrategy is a publicly traded business intelligence and enterprise analytics software firm. Founded in 1989 and based in Tysons Corner, Virginia, it has over 2,500 customers worldwide.
In August 2020, MicroStrategy made headlines when it announced its intention to convert a significant portion of its cash reserves into Bitcoin (BTC). As a result, the company has purchased over 70,000 BTC with a total value of more than $2 billion (USD), making it one of the largest corporate investors in cryptocurrency.
The company’s CEO, Michael J. Saylor, is an outspoken advocate for Bitcoin and is widely credited for encouraging other large corporations to invest in this new asset class. In a recent interview with Bloomberg TCTV Saylor argued that “Bitcoin is digital gold” and forms an important part of any diversified portfolio.
In addition to their investments in Bitcoin, MicroStrategy offers two tools for consumers and businesses looking to buy or generate bitcoin–the Bitcoin App and the MicroStrategy Cryptocurrency Portal. With these tools users can buy Bitcoin directly from major exchanges or generate returns through buying/selling on exclusive P2P platform exchanges like LocalBitcoins and Paxful.
How much Bitcoin does MicroStrategy own?
In 2020, Billionaire Michael Saylor’s MicroStrategy Inc. made headlines as it converted over 400 million dollars of its treasury into Bitcoin, making it one of the largest public companies to add to its balance sheet.
In December, MicroStrategy announced that it had secured a $205 million loan from Deutsche Bank to continue buying Bitcoin, raising the questions of how much Bitcoin does MicroStrategy own?
Let’s explore this in this article.
MicroStrategy’s $205 Million Loan
In a move that’s sending shockwaves throughout the crypto industry, business intelligence firm MicroStrategy has recently taken out a whopping $205 million loan to purchase an even more exquisite amount of Bitcoin. Michael Saylor, the company’s CEO, confirmed the news on September 14 2020.
MicroStrategy issued a bond offering in the United States to fund this purchase, with JPMorgan and JPMorgan Chase Bank working as underwriters on the deal. The bond offering proceeds were used to purchase an additional 21 089 BTC for a total cost of $204 million. In doing so, MicroStrategy became one of the largest companies in the world to acquire Bitcoin en masse.
The total Bitcoin holdings held by MicroStrategy now sits at an impressive 42 548 BTC and is worth almost $1 billion at any given time — making it one of the world’s largest corporate owners of digital currency. Considering all this activity and investment, it will be interesting to see what other major corporations want to incorporate cryptocurrency into their financial operations to hedge against fiat inflation and risky stocks.
MicroStrategy’s Current Bitcoin Holdings
As of February 2021, MicroStrategy, a public business intelligence company based in the United States has become one of the largest institutional investors in Bitcoin, holding over 70,000 BTC – valued at more than US$3.5 billion at current prices.
The company first revealed its initial investment of $250 million in Bitcoin on August 11th, 2020 in an announcement on its website. Over the following months, the company accumulated Bitcoin through multiple purchases totaling approximately $1.125 billion.
At its last disclosed purchase on February 8th 2021, MicroStrategy purchased around 19,452 BTC at an average price of USD 52,765 per bitcoin. With these latest purchases the company’s total holdings now stand at over 70,784 BTC – with a combined value exceeding US$3.5 billion as of february 2021 – making it one of the largest institutional investors in bitcoin globally.
Bitcoin Price Predictions
With cryptocurrency becoming increasingly popular, many experts are making bold predictions of Bitcoin. Billionaire Michael Saylor’s MicroStrategy recently took on a loan of $205 million to buy more Bitcoin, making headlines in the process. Many experts are now looking toward the possibility of a Bitcoin price of over $50,000.
Let’s consider what these experts are saying and what this means for the price of Bitcoin.
Analysts’ Predictions for Bitcoin Price
Analysts’ predictions for Bitcoin price vary widely, ranging from its potential to reach a new all-time high of $100,000 by the end of 2021 to more conservative estimates suggesting a price drop. While opinions vary, all eyes are on the leading cryptocurrency with its massive growth witnessed in 2020 and early 2021, when it hit an all-time high of over $41,000 in January 2021.
In recent weeks, analysts and experts have noted that despite their bullish stance on Bitcoin’s prospects, some volatility is expected — citing one major factor as MicroStrategy’s purchase of large amounts of Bitcoin. In September 2020 alone, MicroStrategy had invested approximately $475 million in Bitcoin— followed by another $650 million purchase in February 2021. This gives them an aggregate total of approximately 91,326 BTC — counting from the original 70,470 BTC held by the company before September.
Analysts have speculated that this could push prices up or down depending on MicroStrategy’s long-term plans for its holdings. If they choose to sell their holdings, then it is likely to put downward pressure on the price due to selling pressure — similarly if they intend to hold them for the long-term, it will provide support for higher prices due to less selling pressure. Thus it remains unknown whether additional buying or selling pressure will result from MicroStrategy’s decisions, which could influence future price movements.
MicroStrategy’s Bitcoin Price Predictions
One of the important questions when considering investing in Bitcoin is how much influence different players can have on the price. As a result, many investors are interested in determining whether large companies, such as MicroStrategy, have the power and resources to impact Bitcoin’s price. MicroStrategy is a publicly traded company that owns many Bitcoin assets and makes bold predictions about the price.
In August 2020, MicroStrategy made headlines when it revealed their plan to purchase an additional $250 million worth of Bitcoin, bringing their total holdings to nearly 40,000 Bitcoins (valued at over $4 billion). Through this investment, MicroStrategy became one of the world’s largest holders of Bitcoin. This has been seen as a sign that institutional and corporate sentiment around cryptocurrencies are shifting towards more adoption.
More recently, in October 2020 MicroStrategy CEO Michael Saylor predicted that Bitcoin “will reach $500,000 within three years” which he later revised to claiming that “Bitcoin could hit $1 million within five years”. While Saylor did not specify his thought process behind these predictions nor provide any evidence for why he believes these prices are possible, his late-September prediction of a 2021 bull market for Bitcoin has appeared to come true with each consecutive month setting another all-time high for BTC prices.
Given its large holding size it’s unclear if or how much influence MicroStrategy’s economic manoeuvres may have on BTC prices over time but what remains certain is that crypto markets remain volatile. Therefore, investors should always assess risk before entering positions.