Hedge funds are helping to drive MicroStrategy’s bitcoin acquisition strategy, with the company having announced another multimillion dollar purchase of the cryptocurrency, marking its eighth consecutive week of acquisitions, according to a report by Bloomberg.
Over the past two months, the software-turned-bitcoin treasury company has cemented its role as a leveraged proxy for cryptocurrency investments, backed by increasing hedge fund interest.
MicroStrategy revealed it acquired $209m worth of bitcoin between 23 and 29 December, purchasing 2,138 tokens at an average price of approximately $97,837 per token. While Bitcoin prices have eased from their recent highs above $100,000, hedge fund-driven demand has continued to propel MicroStrategy’s purchasing momentum.
Hedge funds have emerged as key players in MicroStrategy’s capital-raising and bitcoin buying spree. Utilising convertible arbitrage strategies, funds are buying the company’s bonds while shorting its shares, taking advantage of the stock’s high volatility.
According to 13F filings, hedge funds increased their holdings in the company by over 50% in the past two quarters, with notable names such as Renaissance Technologies, Millennium Management, and Two Sigma Investments ramping up their exposure.
The company, led by Co-Founder and Chairman Michael Saylor, has leveraged hedge fund interest to secure capital at a rapid pace. MicroStrategy aims to raise $42bn through stock sales and convertible debt offerings over the next three years, with the majority of this funding earmarked for bitcoin purchases.
MicroStrategy’s focus on growing its bitcoin holdings has transformed it into a dominant player in the cryptocurrency market, driving its market capitalisation to over $80bn, earning the company a spot in the Nasdaq 100 Index in the process.
To maintain its buying momentum, MicroStrategy is seeking shareholder approval to increase the number of authorised Class A common and preferred stock, as outlined in a recent proxy statement, a move aimed at providing additional flexibility for capital raising as hedge funds continue to drive demand for its convertible bonds and stock offerings.
