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MicroStrategy’s fourth anniversary of Bitcoin: A review of its acquisition strategy and market influence

BlockBeatsBlockBeats2024/08/12 12:00
By:BlockBeats

The MSTR and BTC price correlation occasionally drops to 0 or negative values, and interestingly, all of these instances have marked local or absolute bottoms for Bitcoin.

Original title: "MicroStrategy's Bitcoin Anniversary: A Look Back at Its Acquisitions and Market Influence"
Original author: Valdrin Tahiri, CCN
Original translation: Fairy, ChainCatcher


Key points summary:

MicroStrategy (MSTR) began buying Bitcoin in August 2020.

The company purchased more than 15,000 Bitcoins five times.

Is there a correlation between these purchases and MSTR's stock price?


On August 11, 2020, MicroStrategy made its first bold foray into the Bitcoin (BTC) space, making headlines at the time and ushering in a new era for the entire industry.


Led by Michael Saylor, MicroStrategy has quickly risen to become one of the world’s largest public Bitcoin holders, revolutionizing the way companies think about financial management and transforming the industry’s attitude toward digital assets.


As we approach the fourth anniversary of this decision, let’s dive into some of MicroStrategy’s major Bitcoin purchases and see how these strategic moves have affected the market.


Open Buy


MicroStrategy’s most iconic purchase took place on August 11, 2020.


At the time, the company’s chairman, Michael Saylor, announced that the Nasdaq-listed company had purchased 21,454 Bitcoins for $250 million. The investment marked a major shift in MicroStrategy’s strategy, incorporating Bitcoin into the company’s financial strategy.


Seller calls Bitcoin a "reliable store of value" and sees it as a hedge against inflation.


His vision is clear: to set a new standard for corporate financial management and demonstrate the company's confidence in the future of Bitcoin. And it turns out that he has indeed set a new standard - MicroStrategy has become one of the best performing technology companies in the world.


Following the announcement, Bitcoin’s price surged, reflecting the market’s growing confidence in its legitimacy as an asset. MicroStrategy’s stock also rose as investors appreciated the bold move. This initial purchase paved the way for MicroStrategy to become the leading company to publicly hold Bitcoin, reshaping industry norms.


Top 5 Bitcoin Purchases on Record


Bitcoin purchases have been a big part of MicroStrategy’s stock price performance.


Here are the five largest Bitcoin purchases made by MicroStrategy, sorted by the amount of Bitcoin purchased rather than the total price at the time of purchase:


December 21, 2020 – 29,646 BTC

August 11, 2020 – 21,454 BTC

February 24, 2021 – 19,452 BTC

September 14, 2020 – 16,796 BTC

November 30, 2023 – 16,130 BTC


In terms of stock price performance, MicroStrategy (MSTR) stock rose in four of the five weeks (indicated by the white icons) when the company made its largest Bitcoin purchases. The only exception was the week of the third-largest purchase (denoted by the black icon), when MSTR shares fell more than 13%.


While MSTR shares have risen 80% of the time following a large Bitcoin purchase, the relationship is not as simple as it seems. Share price increases do not always line up perfectly with the size of the purchase.


MSTR shares have ranged from 5% to 21%. In fact, the most impressive gain came in August 2020, when shares surged 21%. This was followed by another 12% gain in September 2020.



While MicroStrategy stock has outperformed most of the time, how has Bitcoin performed?


Impact on Bitcoin Price


Bitcoin price performance is similar to that of MicroStrategy. BTC prices rose in four of the five major Bitcoin purchases made by the company. The only exception was the third major purchase in February 2021, when Bitcoin prices fell.


It is worth noting, however, that Bitcoin’s largest gains came at the time of the largest purchase in December 2020, when the price rose 12%. This contrasts with MicroStrategy’s stock performance, where the largest gains in MSTR’s stock price did not necessarily correlate with the largest purchases.



With this in mind, it is worth comparing whether there is an increasing correlation between MicroStrategy’s stock price and the value of Bitcoin. As MicroStrategy’s Bitcoin holdings increase, one would expect the price movements of the two to become more closely linked.


This may be the case. Prior to MicroStrategy’s first purchase of Bitcoin in August 2020 (black markers), there was little correlation between MSTR and Bitcoin prices. The correlation coefficient (blue markers) fluctuated around zero, indicating no real relationship between the two assets.


But since August 2020, the picture has changed significantly. The correlation becomes positive, sometimes even reaching a perfect positive correlation score. This indicates that the price changes of both now closely mirror each other's movements.


This pattern is very clear when comparing the price charts: MSTR (white) and Bitcoin (orange) move in close sync, especially during the current bull run. The synchronicity indicates that as MicroStrategy's Bitcoin holdings increase, its stock price increasingly reflects Bitcoin's performance, showing a growing connection between the two.



Occasionally, the correlation drops to 0 or negative values (black circles). Interestingly, all of these instances mark local or absolute bottoms for Bitcoin. This bodes well for future Bitcoin and MSTR prices, as the correlation is currently 0.20.


Thus, there is a positive correlation between MicroStrategy's large purchases, Bitcoin's price, and MSTR's price. The correlation between MSTR and Bitcoin is also positive and strengthens with each purchase.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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