MicroStrategy Raises $3 Billion to Expand Bitcoin Holdings as MSTR Shares Dip 25%

MicroStrategy, the leading business intelligence firm known for its massive Bitcoin holdings, has successfully completed a $3 billion offering of 0% convertible senior notes, with the proceeds earmarked to purchase additional Bitcoin. The offering, due to mature in December 2029, comes as the company’s stock (MSTR) experienced a significant drop of over 25% on November 21.

Convertible Senior Notes and Bitcoin Expansion

The $3 billion offering of convertible senior notes is being issued with a 55% premium, setting the implied strike price at around $672 per share. These notes are unique in that they do not pay regular interest to bondholders. Instead, they are sold at a discount and will mature at face value unless converted before the maturity date. The convertible notes are also “senior” to common stock, giving bondholders priority in the event of liquidation or bankruptcy.

MicroStrategy plans to use the proceeds from this offering to purchase more Bitcoin, further solidifying its position as the largest corporate holder of the cryptocurrency. If the company were to allocate the full $3 billion towards Bitcoin, it could acquire approximately 30,600 BTC. Currently, MicroStrategy holds over 331,200 Bitcoin, valued at over $32.7 billion, according to Saylor Tracker.

Part of a Larger Strategy

This latest $3 billion raise is part of MicroStrategy’s broader strategy to increase its Bitcoin holdings under its ambitious “21/21” plan. The company aims to raise a total of $42 billion over the next three years, split equally between $21 billion in equity and $21 billion in fixed-income securities. All of these funds will be directed toward acquiring more Bitcoin, further embedding the firm into the cryptocurrency ecosystem.

This move follows an earlier announcement on November 18, where MicroStrategy initially planned to raise $1.75 billion, which was later increased to $2.6 billion by November 20. The company's aggressive strategy highlights its commitment to Bitcoin and its belief in the cryptocurrency’s long-term value.

MSTR Stock Drops Amid Hedging Activity

Despite the ambitious fundraise, MicroStrategy’s stock faced a sharp decline on November 21. MSTR shares fell over 25%, dropping from a high of $536.7 to $397.28 per share. This drop was attributed to a short position hedged by Cirtron Research, which indicated that MSTR’s stock had become “overheated” and its price was disconnected from the fundamentals of Bitcoin itself.

However, despite the recent dip, MicroStrategy's stock has performed exceptionally well in 2024, up a staggering 480% year-to-date. On November 20, MSTR was the second most-traded stock in the United States, as investors continued to evaluate the potential benefits and risks of gaining Bitcoin exposure through the firm.

Contributing to Record Trading Volume

MicroStrategy’s activities also contributed to a historic milestone on November 21, as the “Bitcoin Industrial Complex” — which includes US spot Bitcoin ETFs and Bitcoin-related stocks like MSTR and Coinbase (COIN) — saw a record-breaking trading volume of $70 billion. This surge in trading coincided with Bitcoin’s rise to a new all-time high of $98,311, reflecting growing investor interest in both the cryptocurrency and Bitcoin-related equities.

As of November 21, Bitcoin is trading at $98,423, just 1.5% away from crossing the $100,000 threshold. The increase in Bitcoin’s price and the record trading volume demonstrate the continuing momentum in the cryptocurrency market and its increasing integration into mainstream finance.

MicroStrategy’s ambitious Bitcoin acquisition strategy, despite the volatility in its stock price, underscores the firm’s unwavering confidence in the long-term value of Bitcoin, further cementing its place as a key player in the evolving landscape of crypto investment.