MicroStrategy holds 132,500 BTC despite selling 780 BTC in December 2022 to mitigate capital losses.
The company holds a large bitcoin stash on its balance sheet on Wall Street and could do well in the next crypto bull run. Ignore the haters who don’t understand Bitcoin and cover crypto.
MicroStrategy (NASDAQ: MSTR) is my long-time favorite Bitcoin (BTC-USD) crypto product, as the company holds a large amount of BTC on its balance sheet. The company made headlines when it decided to sell some of its Bitcoins at a loss to reduce its capital gains before the end of 2022. This is a similar strategy for tax deductions that many investors use to reduce their tax liability. Capital gains.
I notice that many haters attack Bitcoin and call it worthless despite the fact that Bitcoin is still up more than 2700% in the last 10 years.
BTC has outperformed the S&P 500 and NASDAQ over the past 10 years, but haters continue to call Bitcoin “worthless”. The charts do not lie and anyone can see that Bitcoin has been a much better investment in the past 10 years than many stocks, ETFs or mutual funds.
MicroStrategy understands that Bitcoin will be the most important asset in the 21st century and it’s good to see them HODL despite all the bad news surrounding crypto.
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Bitcoin Market Price Explained by MicroStrategy
I touched on this topic at the beginning, but some investors may not understand exactly why MicroStrategy sold some of their Bitcoin immediately and bought it back.
According to CoinDesk, MicroStrategy has accumulated 2,500 BTC in the past few months during the crypto bear market. However, the company decided to sell 780 BTC to end the capital.
Although Bitcoin is not regulated by the SEC or the government, the law requires investors to pay taxes on capital gains made on Bitcoin purchases. If you want to minimize your profit, just HODL Bitcoin and don’t sell for profit.
However, MicroStrategy used the current wild market profit to sell at a loss while accumulating more Bitcoin in the process. This is another good thing that the company is doing to increase and reduce its corporate tax liability.
Michael Saylor Understands That Bitcoin is Very Important for the Future of Money
When chairman Michael Saylor stepped down as CEO of MicroStrategy, he wanted to focus all his efforts on Bitcoin instead of managing everything inside the company. The ability to store people’s financial power on a decentralized blockchain controlled by a central bank or government has huge long-term benefits. This is why MicroStrategy bought Bitcoin before anyone realized its value.
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The Price of MSTR is Trading Below the Value of Bitcoin on It’s Balance Sheet
From a basic perspective, MicroStrategy is in a good financial position despite all the naysayers. The company holds 132,500 BTC worth about $2.2 billion at the current market price and bears a small risk of being called on a large Bitcoin-backed loan. MSTR stock is currently trading at a market capitalization of $1.6 billion, which is around $600 million less than the full value of Bitcoin on its balance sheet.
The company still has nearly $2.45 billion in debt, but nearly half of that is in the form of convertible bonds that mature in 2027. My guess is that MSTR stock will trade for a lot more over the next 4 years as long as Bitcoin continues to rise over the long term.
With only 9.37 million shares outstanding, I don’t think these convertible bonds will cause much dilution.
Danger
My biggest concern is that MicroStrategy will change its position on Bitcoin and export its assets. That’s the only reason I owned MSTR shares in the first place. The company can sell Bitcoin in the future if necessary, but Michael Saylor seems very optimistic about blockchain technology in the long term.
Another problem is that Bitcoin completely fails or is replaced by another technology. Many critics attack Bitcoin because it is not as valuable as real estate or gold.
What’s Next for MicroStrategy?
MSTR is trading at a price-to-market ratio below 4. This is a significant decline from its P/S ratio over the past 52 weeks. As Bitcoin approaches its next halving in 2024, I will continue to hold my MSTR shares in my SEP IRA. If you’re holding MSTR in the crypto market, you’re risking Bitcoin in the long run. There is no need to change your plan now.