MicroStrategy’s bitcoin bet is paying off in more ways than one

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If the US government really intends to create a strategic bitcoin reserve, it will need to compete with MicroStrategy.

As it stands, the velocity of MicroStrategy’s bitcoin buying has exploded, to the point that it now holds 331,200 BTC ($30.9 billion), or 1.7% of the circulating supply.

For scale, Sen. Lummis has pitched a 1 million BTC target for the government reserve, worth $93.2 billion at current prices. In July, the latest figures showed the US holding over $608 billion in gold certificates in its strategic reserve.

To be clear, there’s no official indication that the US will actually make bitcoin its fifth reserve asset (Polymarket puts the current chance at 36%). And as Blockworks’ Byron Gilliam pointed out in his newsletter yesterday, it could even be a really bad idea. 

Let’s say it does happen. That would mean MicroStrategy is frontrunning the US government at size, potentially driving up prices before the reserve buys its first, very hypothetical, coins.

Mapping exactly when MSTR buys its bitcoin — to perhaps find positive correlation between the price of BTC and the firm’s trades — is unfortunately impossible with the publicly-available data.

MicroStrategy does disclose the number of bitcoins it buys alongside its total dollar spend. But it generally only offers a range of dates on which those trades were made.

Still, averaging those figures out shows that over most of the past three years, MicroStrategy would’ve spent up to several millions of dollars on BTC per day during its buying sprees. Those sprees often last for over a month, according to its filings.

A range of dates wasn’t disclosed for those massive purchases on the left side of the chart (the green, peach and pink plus symbols). They were huge in any case.

By March of this year, when bitcoin was setting all-time highs around $74,000, that number had jumped to $80 million per buying day. 

Come early November, it was $190 million, before ramping up to over $657 million last week — $4.6 billion on 51,780 BTC between Nov. 11 and Nov. 17, at an average price of $88,627. 

The price of bitcoin climbed up to 14% across that period, from $80,000 to more than $91,000. 

Saylor has previously said that MSTR has bought bitcoin on spot markets, but that was early on. 

It could be that the firm these days acquires bitcoin over the counter, which would dampen direct impact. The sheer size of the buys, however, would probably still influence prices somewhere down the line.

Linking MicroStrategy’s bitcoin buys and its share price is far more straight-forward.

MSTR has gone over 3,000% in the past five years or so, compared to 800% for bitcoin

There was a time when MicroStrategy stock (in blue) was weighed down by its bitcoin (the orange area in the background) — leading the two assets to closely track each other in the bear market.

All that changed in late February, when Saylor announced his company had added 3,000 BTC ($155 million then, $280 million now). MSTR stock then jumped 27% in two days, and bitcoin went on to set an all-time high three weeks later.

MSTR has been tightly correlated with the dollar value of its bitcoin treasury ever since — not the price of bitcoin — swelling its market cap from $10 billion to nearly $100 billion.

If that persists, MSTR’s share price might be resistant to bitcoin downturns as long as it buys the dip, which it probably will, considering the debt raises keep coming. In the meantime, shareholders are no doubt enjoying the show. 

As would MicroStrategy execs and insiders, who’ve now offloaded almost $559 million in company shares so far this year, per OpenInsider data, which compiles SEC filings (almost three-quarters going to Saylor, who’s said that he intends to buy bitcoin himself).

And they say the key to building generational wealth is diversification.

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