MicroStrategy Posts Loss After Writing Down Bitcoin Holdings, But Remains Bullish on Long-Term Prospects
MicroStrategy Inc. a prominent business intelligence and software firm, faced a setback in its third quarter of 2023 due to a significant writedown on its Bitcoin holdings. Nevertheless, the company’s confidence in Bitcoin’s long-term potential remains unshaken, and it is committed to further accumulating the cryptocurrency.
MicroStrategy’s Bitcoin Holdings
MicroStrategy stands as one of the largest publicly traded holders of Bitcoin. By the end of October 2023, the company held over 158,000 Bitcoins, with a total cost of $4.69 billion, averaging about $29,586 per Bitcoin. The journey of accumulating Bitcoin began for MicroStrategy back in August 2020 as part of its corporate treasury strategy. The company firmly believes that Bitcoin is a digital asset with substantial long-term growth potential and sees it as a hedge against inflation and various macroeconomic risks.
Third Quarter Results
In the third quarter of 2023, MicroStrategy reported a net loss of $143.4 million, a significant drop from the $27 million net income it recorded in the same period the previous year. The primary reason for this loss was a $33.6 million impairment on the company’s Bitcoin holdings. Despite this, MicroStrategy’s software business witnessed a 3% year-over-year revenue growth, reaching $129.5 million. However, the growth was offset by the impairment loss and higher operating expenses.
Michael Saylor on Bitcoin
CEO Michael Saylor remains unwavering in his optimism about Bitcoin’s long-term potential, despite recent price declines. During a post-earnings conference call, Saylor expressed MicroStrategy’s continued commitment to acquiring Bitcoin and voiced strong confidence that the cryptocurrency will eventually reach a price point of $500,000 or higher. Additionally, the company is considering the possibility of launching a Bitcoin ETF in the future. This move would allow MicroStrategy to diversify its Bitcoin holdings and provide investors with an indirect way to invest in Bitcoin without directly purchasing the cryptocurrency.
Bitcoin Price Analysis
Bitcoin gained around 27% in the month of October while this year Bitcoin is up over 100%. Currently, the Bitcoin price is above $35,000 and now the main area of focus for the buyers will be to keep the Bitcoin price above $35,000. Currently, the $35,000 support seems weak and a break out below this level could likely take Bitcoin price close to $34,000.