MicroStrategy’s Bitcoin Purchases: A Surefire Sign of a Temporary Tumble
We’ve seen this movie before. Every time Michael Saylor‘s MicroStrategy announces a fresh Bitcoin purchase, the digital gold takes a nosedive. It’s almost as reliable as a politician’s promise to lower taxes.
The latest episode of this tragicomedy unfolded on June 27, 2023, when MicroStrategy announced the purchase of 12,333 Bitcoin for a whopping $347 million. What is the market’s response? A collective shrug and a retreat to the lower end of the recent trading range of $30,000 to $31,000.
The MicroStrategy-Induced Bitcoin Dip: A Tale Told by Data
Now, let’s add some number crunching to this. Since 2020, Bitcoin has registered an average daily return of negative 2% on the days of MicroStrategy announcements. It’s like clockwork. The announcement comes out, and boom! Bitcoin takes a dip.
But here’s the rub. MicroStrategy’s announcements may be followed by short-term negative price action in Bitcoin, but there’s no clear evidence of a prolonged adverse market impact. In fact, the average weekly return following MicroStrategy’s announcement is slightly positive.
MicroStrategy has acquired an additional 12,333 BTC for ~$347.0 million at an average price of $28,136 per #bitcoin. As of 6/27/23 @MicroStrategy hodls 152,333 $BTC acquired for ~$4.52 billion at an average price of $29,668 per bitcoin. $MSTR https://t.co/joHo1gEnR0
— Michael Saylor⚡️ (@saylor) June 28, 2023
MicroStrategy: The Unwitting Bitcoin Bear?
So, what’s the takeaway from all of this? Is MicroStrategy inadvertently becoming the bear in the Bitcoin market? Is their appetite for Bitcoin so voracious that it’s siphoning off all the buy-side liquidity, causing these temporary price dips?
Well, that’s one way to look at it. But let’s not forget that these price dips are temporary, and the market seems to recover in the following days. So, don’t go betting the farm on a Bitcoin crash every time MicroStrategy decides to expand its digital treasury.
It seems that MicroStrategy’s Bitcoin shopping sprees are causing short-term market fluctuations, but it’s nothing the resilient Bitcoin market can’t handle. We have been here so many times before.
So, next time you see a headline about MicroStrategy snapping up more Bitcoin, don’t panic. Just sit back, grab some popcorn, and enjoy the show. After all, in the grand scheme of things, it’s just another day in the world of cryptocurrency.
