MicroStrategy's Four-year Involvement in BTC: A Review of Acquisition Strategy and Market Influence

Original Title: MicroStrategy’s Bitcoin Anniversary: A Look Back at Its Acquisitions and Market Influence

Original author: Valdrin Tahiri, CCN

Original Compilation: Fairy, ChainCatcher

Summary of Key Points

• MicroStrategy (MSTR) began purchasing BTC in August 2020.
• The company has purchased over 15,000 BTC five times.
• Is there a correlation between these purchases and the price of MSTR?

On August 11, 2020, MicroStrategy boldly entered the BTC field for the first time, making headlines at the time and ushering in a new era for the entire industry.

Under the leadership of Michael Saylor, MicroStrategy quickly rose to become one of the world’s largest publicly held companies with BTC, completely changing the way enterprises think about financial management and transforming the industry’s attitude toward digital assets.

On the fourth anniversary of this decision, let’s take a deep dive into some of MicroStrategy’s major BTC purchasing cases and see how these strategic initiatives have impacted the market.

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

At that time, the company’s chairman, Michael Saylor, announced that the publicly traded company had purchased 21,454 BTC for a price of $250 million. This investment marked a significant shift in MicroStrategy’s strategy, incorporating BTC into the company’s financial strategy.

Saylor referred to BTC as a reliable store of value and considers it a hedging tool against inflation.

His vision is very clear: to set a new standard for corporate financial management and demonstrate the company’s confidence in the future of Bitcoin. And the fact is, he has indeed set a new standard - MicroStrategy has become one of the best performing technology companies globally.

After the announcement, the price of BTC soared, reflecting the market’s growing confidence in its legitimacy as an asset. MicroStrategy’s stock also pumped as investors appreciated this bold move. This initial purchase paved the way for MicroStrategy to become a leading publicly traded company holding BTC, reshaping industry standards.

Top 5 BTC Purchase Records

The purchase of BTC has always been an important component of MicroStrategy’s stock performance.

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

1. December 21, 2020 - 29, 646 BTC
2. On August 11, 2020, 21, 454 BTC
3. February 24, 2021 – 19,452 BTC
4. On September 14, 2020, 16, 796 BTC
5. November 30, 2023 - 16, 130 BTC

From the performance of the stock price, MicroStrategy (MSTR) stock has seen pumps in four out of the five weeks in which the company made its largest BTC purchases (indicated by white icons). The only exception was in the week of the third largest purchase (indicated by black icons), when MSTR stock price fell by over 13%.

Although MSTR’s stock price has pumped for 80% of the time after large-scale BTC purchases, this relationship is not as simple as it seems. The stock price pump is not always directly proportional to the purchase volume.

The MSTR’s stock price has a Fluctuation range of 5% to 21%. In fact, the most impressive surge occurred in August 2020, when the stock price soared by 21%. This was followed by a pump of 12% in September 2020.

Although MicroStrategy’s stock has performed well most of the time, how has BTC performed?

The Impact of Bitcoin Prices

The price performance of BTC is similar to that of MicroStrategy. In five major BTC purchases by the company, there were pumps four times. The only exception was a slight price drop during the third large-scale purchase in February 2021.

However, it is worth noting that the largest pump of BTC occurred during the largest-scale purchase in December 2020, when the price pumped by 12%. This contrasts with the performance of MicroStrategy’s stock, as the maximum increase in MSTR’s stock price is not necessarily related to the largest purchase volume.

Taking this into consideration, it is worth comparing the stock price of MicroStrategy with the value of BTC to see if there is an increasingly close connection. As MicroStrategy’s BTC holdings increase, it is possible to estimate that the PA of the two will be more closely linked.

The situation is indeed so. Before MicroStrategy first purchased BTC in August 2020 (black mark), there was almost no correlation between MSTR and BTC prices. The correlation coefficient (blue mark) fluctuated near zero, indicating no real relationship between the two assets.

But since August 2020, there has been a significant change. The correlation has become positive, sometimes even reaching a perfect positive correlation score. This indicates that the price changes of the two now closely reflect each other’s trends.

This pattern is very obvious when comparing price charts: the trend of MSTR (white) and BTC (orange) is highly consistent, especially during the current Bull Market period. The synchronous phenomenon indicates that as MicroStrategy’s BTC holdings increase, its stock price increasingly reflects the performance of BTC, showing an increasingly strong correlation between the two.

Correlation occasionally drops to 0 or negative (black circle). Interestingly, all of these cases mark a local or absolute bottom for BTC. This is a good sign for future BTC and MSTR prices as the current correlation is 0.20.

Therefore, there is a positive correlation between MicroStrategy’s large purchases, BTC price, and MSTR price. The correlation between MSTR and BTC also shows a positive correlation, which strengthens with each purchase.