Bitcoin’s price surged to a record high of over $107,000 on Monday, driven by growing optimism about the possibility of President-elect Donald Trump establishing a bitcoin strategic reserve. The largest cryptocurrency by market cap broke the $106,000 barrier for the first time in late trading Sunday.
MicroStrategy, a company that calls itself a “bitcoin treasury,” announced a new purchase of $1.5 billion worth of bitcoin last week. This brings the total value of its holdings to approximately $47 billion at current prices. The company’s market cap has grown from $1.1 billion in August 2020 to nearly $100 billion now.
MicroStrategy’s shares have gained over 527% this year, largely due to rising bitcoin prices. However, some analysts think the stock may have more room to run after its inclusion in the Nasdaq 100 index starting next week. The company’s potential entry into the S&P 500 index could be harder to achieve, as it would require a market capitalization of at least $18 billion.
The biggest challenge for MicroStrategy is likely its profitability. The company has not turned a profit in recent quarters due to accounting rules that prevent it from capturing gains from rising bitcoin prices. However, new accounting standards may change this, allowing the company to record more of its gains and potentially boost its profits come January 2025.
As bitcoin continues to rally, investors are eagerly watching for signs of what’s next for MicroStrategy and other bitcoin-focused companies like it.
Source: https://www.investopedia.com/bitcoin-hits-usd107k-as-microstrategy-buys-more-8761875