MicroStrategy, led by Michael Saylor, has pushed the boundaries of enterprise Bitcoin adoption.
With a remarkable asset of 439,000 Bitcoins worth approximately $46.92 billion, the company now owns over 2% of the total Bitcoin supply.
Bitcoin Guide MicroStrategy
This aggressive strategy has both cemented Bitcoin’s place in corporate finance and raised concerns about market stability. While proponents view MicroStrategy’s move as a milestone for Bitcoin’s legitimacy, critics warn of the risks inherent in such concentrated assets.
MicroStrategy has redefined the role of corporate treasuries by making Bitcoin its primary reserve asset. Unlike traditional reserves held in cash or low-risk assets, MicroStrategy conducted bitcoin acquisitions funded through smart financial instruments such as zero-interest convertible bonds and stock sales.
Most recently, the company raised $1.5 billion through a stock sale, issuing 3.8 million shares to buy 15,350 bitcoins at an average price of $100,386 per coin.
“This strategy has given MicroStrategy a significant first mover advantage,” Alexander Schmidt, index fund manager at CoinShares, told BeInCrypto.
The company positions itself as an intermediary for Bitcoin investments, offering shareholders the ability to influence the price of Bitcoin without the need to directly own the cryptocurrency.
However, this approach comes with risks. MicroStrategy’s market value is significantly higher than the value of its Bitcoin assets, which is driven by its stock premiums. This creates vulnerabilities if Bitcoin’s value declines or its premium decreases, Schmidt explains.
The cryptocurrency market has seen record growth in 2024, with Bitcoin surpassing $100,000 on December 5th.
The surge was fueled, at least in part, by optimism surrounding the appointment of Paul Atkins, a cryptocurrency advocate, as the new chairman of the Securities and Exchange Commission under President-elect Donald Trump. The value of the broader cryptocurrency market has nearly doubled in 2024, topping $3.8 trillion from $1.6 trillion in January.
An increasing number of companies are including Bitcoin in their treasuries, signaling growing confidence in the digital asset. On December 9, Riot Platforms, a leading Bitcoin mining and digital infrastructure company, announced plans to raise $500 million. offering convertible senior notes to purchase Bitcoin.
A week earlier, Marathon Digital Holdings announced it was raising $700 million to expand its project. Bitcoin purchases. However, MicroStrategy’s dominance in this trend has also raised questions about the stability of the market.
Blockstream, a leading blockchain technology company, also continuously accumulates bitcoins and manages the bitcoin treasury:
“In November, we created a new asset management division that will serve as a catalyst to help other corporate Bitcoin treasuries maximize the returns on their Bitcoin investments. We expect greater adoption from large companies and nation states that are already rethinking their approach to Bitcoin, as well as a continued stream of positive news on this front over the next year,” Sean Beall, chief investment officer at Blockstream, told BeInCrypto.
Can Bitcoin remain decentralized under institutional influence?
MicroStrategy’s 439,000 Bitcoin represents a double-edged sword for the market. On the plus side, the company has legitimized Bitcoin as a strategic asset, inspiring other corporations to consider Bitcoin as their reserve. However, this concentration also creates systemic risks.
“The possibility of such a liquidation raises concerns about liquidity and market stability. Even if the Bitcoin price falls below $18,000 (80% below current levels), MicroStrategy’s assets will still provide a buffer against immediate financial pressure. However, such a scenario will have wider implications for the entire market,” says Schmidt.
Historical events support this view: in 2024, the German government sold 50,000 bitcoins in five weeks, causing prices to fall by 13%. While this event was disruptive, it demonstrated Bitcoin’s resilience to large sell-offs.
MicroStrategy’s dominance has reignited the debate about Bitcoin’s decentralization. Exchange traded products (ETPs) further complicate the picture by concentrating ownership among a smaller number of companies.
While these mechanisms make Bitcoin more accessible to traditional investors, Schmidt believes that ETPs serve different investor pools while maintaining some level of decentralization.
Corporate lessons from MicroStrategy
While MicroStrategy’s aggressive approach has drawn attention, companies like Block Inc. have taken a more measured path. Block reinvests Bitcoin-based profits into its reserves rather than relying on debt financing.
“Companies can buy Bitcoin directly using cash reserves or operating profits, avoiding the financial risks associated with using leverage or taking on debt. This strategy minimizes exposure to market volatility while providing a more stable approach to creating Bitcoin assets. For example, Block Inc. (formerly Square) illustrates this method by reinvesting 10% of its Bitcoin profits into Bitcoin Treasury. This approach, based on the company’s organic growth and financial fundamentals, reflects a balanced Bitcoin accumulation strategy,” explains Schmidt.
Corporations exploring Bitcoin adoption should consider their risk tolerance, financial structure, and long-term goals. For individual Bitcoin holders, the key is to focus on fundamentals. Bitcoin’s scarcity and its decentralized nature remain unchanged.
“Bitcoin’s fundamental architecture, particularly its decentralization and unique consensus mechanism, means that no single entity can control its future. While MicroStrategy’s influence is significant, it is only one player in an increasingly diversified ecosystem. Bitcoin owners should focus on the fundamentals: their scarcity, reliability and utility, which remain unchanged, and take a long-term view accordingly,” Bill said.
Schmidt, meanwhile, suggests diversification to mitigate the risks associated with MicroStrategy’s actions.
“Watch for market signals such as management changes or large stock sales. Long-term strategies are critical. Bitcoin has experienced multiple drawdowns of over 50%. Patience rewards long-term holders,” he concludes.
MicroStrategy highlights both the potential and risks of corporate adoption of Bitcoin. While it supported Bitcoin’s legitimacy and contributed to its institutional adoption, it also highlighted the problems of asset concentration in a decentralized network.
The growth of the cryptocurrency market in 2024 illustrates the sustainability and attractiveness of digital gold. However, as more institutions enter this space, the balance between decentralization and institutional participation will shape the Bitcoin narrative.
