MicroStrategy announced to invest more $500 million on Bitcoin, wait for market reaction

 MicroStrategy will invest $500 million on Bitcoin:

Michael Saylor, the executive chairman of MicroStrategy, recently announced a major financial move to expand the company’s Bitcoin holdings. On March 18, he revealed plans to issue 5 million shares of a new stock called Series A Perpetual Strife Preferred Stock (STRF). Through this, the company aims to raise $500 million to buy more Bitcoin. This decision aligns with Strategy’s long-standing approach of aggressively accumulating the cryptocurrency.

Unlike regular shares, STRF stock does not grant voting rights to investors. Instead, it offers fixed dividend payments of 10% per year, with payouts made every quarter in cash. This method allows Strategy to raise funds without reducing the control of existing shareholders. However, some financial experts and crypto enthusiasts are questioning whether the company can afford these dividend payments in the long run.

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MicroStrategy’s ongoing Bitcoin acquisitions have sparked criticism in the past, and this latest announcement was no exception. Many figures in the crypto community, especially on social media, reacted with skepticism. A well-known anonymous trader even claimed that Saylor’s actions could trigger the next major Bitcoin downturn, causing concern among investors.

One major doubt raised is whether MicroStrategy can actually afford the promised dividends. A 10% annual dividend on $500 million means the company would have to pay $50 million per year. Critics pointed out that Micro Strategy’s last financial report showed it only had $38.1 million in cash as of December 31, 2024. This amount was even lower than the previous year’s cash holdings, raising questions about how the company plans to cover the dividend payments.

Another concern is whether MicroStrategy will be forced to sell some of its Bitcoin holdings to meet its financial obligations. As of its last earnings report, the company owned 447,470 Bitcoin, a significant amount that could be used as a backup plan if needed. However, selling Bitcoin could contradict Saylor’s strategy of long-term accumulation, which has been the company’s primary focus.

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Despite these concerns, not everyone believes this move will harm the Bitcoin market. Some analysts argue that while MicroStrategy may face financial challenges, its strategy is unlikely to cause a market collapse. They believe that Bitcoin’s price movements depend on a variety of factors beyond just one company’s actions.

As MicroStrategy continues with its aggressive Bitcoin buying strategy, the debate over its financial stability and impact on the crypto market remains heated. Supporters see this as a bold move to further integrate Bitcoin into corporate finance, while critics fear the risks of overleveraging and potential instability. The coming months will be crucial in determining whether Saylor’s vision proves successful or leads to unexpected challenges.