On Monday, business intelligence firm Microstrategy, led by Bitcoin (BTC) advocate Michael Saylor, announced its intention to offer $700 million in convertible senior notes due 2028 as part of a broader strategy to strengthen its Bitcoin portfolio while restructuring existing debt.
MicroStrategy’s Strategic Bitcoin Move
According to the announcement, the proposed notes will be unsecured, senior obligations of MicroStrategy and are expected to bear interest payable semi-annually starting March 15, 2025.
The notes will mature on September 15, 2028, unless repurchased or converted earlier under specified conditions. Notably, the company plans to grant initial purchasers an option to acquire up to an additional $105 million in notes within a 13-day window following the initial issuance.
MicroStrategy intends to utilize the proceeds from this offering primarily to redeem its existing $500 million in 6.125% Senior Secured Notes due 2028. This redemption will not only reduce the company’s debt burden but will also release collateral previously securing these notes, which includes approximately 69,080 BTC.
The company also announced on Monday that the redemption is scheduled for September 26, 2024, subject to the successful closing of the new notes offering to eligible investors.
Total Investment Reaches $9.45 Billion After Recent Acquisition
The announcement follows MicroStrategy’s recent acquisition of 18,300 Bitcoin disclosed last Friday, valued at around $1.11 billion, which has brought the company’s total Bitcoin holdings to approximately 244,800 BTC.
Interestingly, this substantial investment represents about 1% of all Bitcoins ever issued, reinforcing MicroStrategy’s position as a leading institutional holder of the largest cryptocurrency on the market.
The total investment in BTC by MicroStrategy now stands at approximately $9.45 billion, with an average purchase price of around $38,585 per Bitcoin.
At the time of writing, Bitcoin stands at $57,760, recording losses of 3.5% in the past 24 hours. However, in the weekly time frame, BTC is still holding on to some of its gains with a 1.5% gain in this period.
However, the longer time frames are more worrisome for BTC, as the fourteen and thirty-day time frames show the bearish trend that BTC has been experiencing for the past few months, after losing the $70,000 mark in early August.
This has resulted in BTC recording losses of 1.4% and nearly 3% in the fourteen and thirty-day time frames respectively, according to CoinGecko data. Nevertheless, BTC is still accumulating significant trading volume compared to the weekend, as the last 24 hours saw a 125% increase in this metric, amounting to nearly $32 billion.
It remains to be seen if lower support levels can withstand further price volatility that may be seen this week ahead of the Federal Reserve’s (Fed) rate cut announcement.
Featured image from DALL-E, chart from TradingView.com
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