Bitcoin Falls To 3-Week Low—Here’s Why
Bitcoin on Friday fell to its lowest level in weeks after Strategy, the world’s largest institutional backer of the leading cryptocurrency, announced plans to offload billions of dollars worth of crypto amid a weaker-than-expected earnings report.
The price of bitcoin dropped 3.1% over the last 24 hours to around $62,702 as of Friday afternoon, after falling as low as $62,498 earlier in the day, the crypto’s lowest level since July 9.
A slide followed Strategy announcing quarterly revenue of $122.4 million on Thursday, just below consensus analyst estimates of $122.9 million, and CEO Phong Le said during Strategy’s earnings call the company had discussed plans to sell up to $5 billion of bitcoin.
Le said the bitcoin sale is “appropriate for the company” because it allows Strategy to build up its cash reserves and potentially fund stock repurchases, and while the figure could be much smaller, Strategy founder Michael Saylor cautioned it could be larger.
Shares of Strategy declined 7.3% on Friday, extending a roughly 42% loss so far this year.
Saylor, who founded Strategy, then known as MicroStrategy, in 1989, has an estimated net worth of $3.2 billion as of Friday. He emerged as a leading executive during the dot-com bubble, after which Saylor’s fortune shrank, but Strategy’s bitcoin investments made him a billionaire once again as he directed the firm to shift its corporate coffers into cryptocurrency.
843,775. That’s Strategy’s total bitcoin holdings, which the company priced at an aggregated market value of $63.8 billion, or about $75,476 per token, as of July 6.
Strategy’s bitcoin reserves far outweigh its cash holdings, which totaled $1.4 billion as of last month. The firm announced its first bitcoin sale in years in June, sparking a sell-off in the leading cryptocurrency to below $60,000, effectively cutting its value by more than 100% since hitting an all-time high above $126,000 in October. Saylor defended Strategy’s approach to bitcoin, claiming “volatility tests capital structure” and reaffirmed Strategy “remains focused on bitcoin, disciplined capital allocation, credit quality and long-term value creation.” JPMorgan analysts cautioned that Strategy should add to its cash reserves, however, arguing the move would “restore confidence and reduce investor concerns.”