An analyst broke down the strategy behind the aggressive Bitcoin acquisition being done by MicroStrategy which is gaining attention because of the rising price of the alpha crypto.

Anthony Pompliano, Founder & CEO of Professional Capital Management, understood the mathematical reason behind the company’s investment move but also warned that any investment is exposed to potential risks.

MicroStrategy’s Bitcoin Acquisition

Pompliano said that MicroStrategy is making a bold move to buy more Bitcoin and build up its crypto reserve by using convertible debt to finance the cryptocurrency’s acquisition.

The investment firm offers its shares at a higher price than the current price per share to generate funds for its Bitcoin acquisition.

Pompliano explained that MicroStrategy is selling future equity at a 55% premium to help the company buy more Bitcoin, saying that is a financially attractive move, saying, “This strategy makes sense from a financial perspective.”

Image: Crypto Economy

The analyst said that it is a beneficial strategy for MicroStrategy because it allows the investment firm to gain significant capital which the company is now using to buy a lot of the leading crypto, saying that this approach makes sense mathematically.

The Bitcoin Investment Plan

In October this year, MicroStrategy announced that it would be conducting a Bitcoin shopping spree by raising $42 billion in new capital in the next three years to finance its goal of buying more BTC.

Some analysts consider this Bitcoin investment strategy as a bold move being eyed by the investment firm.

Bitcoin market cap currently at $1.92 trillion. Chart: TradingView.com

According to the company’s executive, the objective of MicroStrategy’s capital-raising approach is to get $21 billion in fresh capital from equity offerings and generate another $21 billion from fixed-income securiti

Go to Source to See Full Article
Author: Christian Encila