Opinion: MicroStrategy, a Bitcoin whale, is right to hoard BTC

MicroStrategy (NASDAQ: MSTR) stock price has pulled back in the past few months as the crypto winter continues. The shares were trading at $335.48 on Monday, 30% below the highest point this year. Still, they remain ~155% above the lowest point in 2022.

MicroStrategy Bitcoin holdings

MicroStrategy is a company that provides data analytics companies to companies like Pfizer, Sony, Visa, and Hilton. It recently started to offer MicroStrategy AI, a suite of products that enable companies to boost their AI operations.

MicroStrategy is now not known for the high-tech solutions it offers. Instead, it is known for its huge Bitcoin holdings. It recently bought an additional 5,445 BTCs worth over $147 million at the time. Its average purchase price was $27,000. 

It now holds Bitcoin worth over $4.8 bilion, a substantial figure since MicroStrategy is now valued at over $4.7 billion. These holdings make MicroStrategy the biggest corporate whale in the world. 

MicroStrategy’s actions could have major implications for Bitcoin price. For example, a major sale could lead to more supply, which would then hit its price. MicroStrategy has said that it has no intentions to sell its Bitcoin holdings any time soon.

Why MSTR is right to hoard Bitcoin

There are three main reasons why MicroStrategy is right to hold Bitcoin in its portfolio. First, the company’s stock has done well since it started to accumulate Bitcoin in 2020. 

While the stock has plunged from its all-time high of $1,310, it remains 245% above the lowest level since 2020. The Nasdaq 100 index has risen by over 120% from the lowest point in 2020.

Second, I believe that Bitcoin will be much higher than where it is today in the next five years. Analysts at Standard Chartered believe that BTC could surge to $50k in the next few years.

Cathie Wood, the founder of Ark InnovationFund sees it rising to $600k in the long term while Thomas Lee of Fundstrat believes it could hit $200k. Michael Novogratz of Galaxy Digital sees it soaring to $500k in the next few years.

These analysts are not always correct since neither of them predicted the ongoing crypto winter. However, there are reasons why BTC could soar. For one, Bitcoin, long-considered a risky asset, thrived during the Covid-19 pandemic, a black swan event.

Bitcoin also survived the FTX collapse and the high-interest rate environment. In the past, the consensus was that risky assets like Bitcoin and Ethereum would not survive a period of high rates. They now sit at their highest level in more than two decades.

There are potential catalysts that will drive the Bitcoin and MSTR price higher. Interest rates will likely start falling in 2024 while the next Bitcoin halving will take place in April. Most importantly, unlike gold, Bitcoin’s supply is running out with the total coins in circulation standing at 19.51 million out of 21 million.