Bitcoin: Why, Despite MicroStrategy's Belief, Are Profits Elusive?

Contents

Still a long way to go Under pressure Retail investors are staring blankly at declining miner revenues

Journalist

Posted: September 26, 2023

MicroStrategy recently invested $147.3 million in Bitcoin, increasing its holdings to $4.7 billion.
However, Bitcoin needed to pass $30,000 to guarantee profits.

Recently, MicroStrategy has been in the spotlight for its continued commitment to Bitcoin accumulation. The US company made headlines in particular for investing another $147.3 million to expand its Bitcoin [BTC] possessions.

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This latest purchase added a substantial 5,445 BTC to MicroStrategy’s existing cryptocurrency reserves.

Still a long way to go

MicroStrategy’s total investment in Bitcoin stood at an impressive $4.7 billion at the time of writing, a clear signal of the company’s continued bullish stance on cryptocurrency.

However, despite his conviction, the company faced challenges. Just a month ago they were enjoying a slight gain, but their valuation at the time of writing was $4.15 billion. This represented an unrealized loss of more than $550 million.

At the time of publication, MicroStrategy’s Bitcoin holdings amounted to 158,245 BTC, with an average purchase price of $29,582 per coin. For these holdings to become profitable, the price of Bitcoin must cross the $30,000 mark, a crucial threshold that will determine MicroStrategy’s success in this venture.

???? Major Charts Revealed: MicroStrategy Announces Another Major BTC Acquisition!

MicroStrategy has once again demonstrated its commitment #Bitcoin with an additional purchase of 5,445 BTC. This acquisition has increased the company’s total Bitcoin holdings to… pic.twitter.com/AuUWADVFx3

— Maartunn (@JA_Maartun) September 25, 2023

Under pressure

While MicroStrategy seemed committed to its long-term Bitcoin accumulation strategy, other cryptocurrency holders may not share the same patience.

Notably, the MVRV (Market-Value-to-Realized-Value) ratio for Bitcoin was declining at the time of writing, indicating that both MicroStrategy founder Michael Saylor and other BTC holders were witnessing a declining profitability.

If Bitcoin’s price were to rise significantly, causing MVRV ratios to return to previous highs, it could prompt these holders to sell their holdings, potentially causing a price correction for the cryptocurrency.

Source: Santiment

The key question is whether other Bitcoin holders will follow MicroStrategy’s lead and maintain a long-term perspective, or whether they will choose to sell once the price approaches or crosses the critical $30,000 mark.

Retail investors are staring blankly at declining miner revenues

In addition to large institutional investors, private participants also showed significant interest in Bitcoin. Glassnode’s data showed that the number of addresses holding 0.1 or more Bitcoins reached an all-time high of 4,499,669.

However, it is important to note that both large and small investors can be affected by the selling pressure exerted by Bitcoin miners. In recent days, miner revenues have fallen significantly, from $32,000 to $24,000 at the time of writing.

Read Bitcoin’s [BTC] Price forecast 2023-2024

Miners may therefore be forced to sell some of their holdings to maintain profitability, potentially impacting Bitcoin’s price dynamics.