The corporate competition to accumulate as much bitcoin as possible before the expected resumption of the leading crypto’s post-halving bull run is intensifying.
Institutional investors pumped $429 million into cryptos and cryptocurrency funds in the week ending December 7, Bitcoin.com reports. The figure, which is the second-highest on record, pushes the total value of digital assets under management (AUM) to an all-time peak of $15 billion. The largest weekly inflow on record is $468 million seen in November.
Two of the most aggressive buyers are MicroStrategy, a business intelligence software firm, and Grayscale, an asset management company.
US-based MicroStrategy plans to raise $400 million through convertible bonds to scoop up more bitcoin, the company announced Tuesday.
Proceeds from the debt sale will be invested in bitcoin if they are not needed for general corporate needs, according to the statement.
Microstrategy first purchased 21,454 bitcoin for $250 million in August as a hedge against inflation, saying its US dollar treasury was “a melting ice cube.”
MicroStrategy bought another $50 million worth of bitcoin on December 4 at an average price of $19,427 per bitcoin. It now holds about 40,284 bitcoins, according to a filing with the Securities and Exchange Commission, Business Insider reports.
With bitcoin soaring to nearly $20,000 last month, the firm’s stock is up around 121% year-to-date, which some observers say makes it a de facto ETF because it gives investors exposure to the crypto without actually buying it.
However, shortly after MicroStrategy’s announcement, the firm’s shares fell because Citibank, which recently said bitcoin could soar to $318,000 in 2021, reportedly downgraded it, Cointelegraph reports.
Citi analyst Tyler Radke issued a “sell” rating on Microstrategy on Tuesday, saying CEO Michael Saylor’s “disproportionate focus on bitcoin” puts investors at great risk, especially after an “overextended” rally since September.
He wrote: “[Microstrategy’s] bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and bitcoin.”
Meanwhile, the Coinshares weekly report, which tracks the flow of money into digital asset funds, shows that Grayscale bought $336 million (about 78%) of the $429 million institutional investors pumped into the market in the week ending December 7. Grayscale has now picked up $4.3 billion in digital assets in 2020 so far and the fund currently leads the investment pack with $12.4 billion AUM.
Barry Silbert, CEO of Digital Currency Group, the parent company of Grayscale, highlighted the competition for bitcoin in a September tweet: “Apparently there is some kind of bitcoin buying race between MicroStrategy and @Grayscale. Game on.”