This article discusses the decline in Bitcoin’s price since Donald Trump’s inauguration, focusing on Strategy’s cost basis and recent BTC acquisition strategies. It highlights how rapidly diminishing buffers between BTC’s price and Strategy’s cost basis reveal challenges for Saylor as he aims to invest $21 billion in Bitcoin under fluctuating market conditions.

Bitcoin’s (BTC) price has experienced a significant downturn since Donald Trump’s presidency began, and it is now nearing the average cost basis held by Michael Saylor’s Strategy (formerly MicroStrategy). The company owns 499,226 BTC with an average purchase price of $66,360 each. Currently, there exists only a 27% buffer separating BTC’s price from that cost basis.

Previously, Strategy enjoyed a robust margin between Bitcoin’s market value and its purchase price, even reaching a record high of $108,786 following Trump’s inauguration, which was 73% above the average purchase price of $62,691 at the time. Notably, in 2021 and mid-2024, BTC’s price exceeded double that of Strategy’s cost basis, supporting a prosperous investment strategy.

However, the crypto landscape shifted to bear market conditions shortly after Trump’s inauguration, largely influenced by his administration’s stance on cryptocurrencies and market policies. While there was potential for Saylor to advocate for Bitcoin’s future amidst a Trump-led transition, current trends indicate BTC’s performance has been disappointing.

As it stands, Bitcoin’s value has dropped to around $84,500, effectively reducing the cost basis buffer for Strategy by 50% since the start of Trump’s term. The premium investors are willing to pay for MSTR shares, reflecting its BTC assets, has concurrently diminished from a previously high ratio of 3.4X to approximately 1.8X.

Most of Strategy’s BTC acquisitions made after November 18, 2024, which included a notable purchase of 51,780 BTC at $88,627, are currently at a loss. Following these purchases, the dollar cost average increased significantly, from just below $40,000 at the beginning of November to the current $66,360.

Saylor has expressed intentions to significantly invest in Bitcoin, aiming to acquire $21 billion worth of BTC, though actual transactions have yet to materialize, and initial efforts have not proceeded as intended. Remarkably, the company recently announced a modest acquisition of 130 BTC, the second smallest in its history, raising questions about Saylor’s commitment to his ambitious financial goals.

The journey ahead concerning the acquisition of additional Bitcoins illustrates the complex challenge faced by corporations in maintaining favorable cost bases while adapting to Bitcoin’s volatile market value. Despite some assertions about Strategy’s market influence—allegedly contributing 28% of last year’s capital inflows—there are also contrary estimates suggesting a much lesser impact on overall BTC trading volumes.

In summary, Bitcoin’s ongoing price decline has significantly reduced the cushion between its market value and Strategy’s average purchase price. The current financial landscape presents challenges for Michael Saylor as he navigates his ambitious plans for Bitcoin acquisitions amidst turbulent market conditions. The modest latest purchases suggest a cautious approach may now be warranted in light of recent performance declines and reduced investor enthusiasm for Strategy shares.

Original Source: protos.com

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