MicroStrategy (MSTR) announced on Wednesday that it had purchased over 12,000 bitcoin (BTC) for $347 million, bringing its total coin stash to 152,333 BTC. Despite the news, the cryptocurrency market failed to show any bullish action, with bitcoin retreating to the lower end of the recent trading range of $30,000 to $31,000.
According to research analyst Vetle Lunde of K33, this is consistent with the cryptocurrency’s record of losing some ground following MicroStrategy’s announcements of new coin purchases of over 1,000 BTC. Lunde said, “MicroStrategy BTC purchase announcements tend to be followed by short-term negative price action in BTC, as the market absorbs the fact that certain buy-side liquidity has left the market.”
Since 2020, bitcoin has registered an average daily return of negative 2% on days of MSTR announcements. However, the average weekly return following MSTR’s announcement is slightly positive. Lunde noted, “The short-term impact tends to reverse in the days that follow, and there are no clear evidence of a prolonged adverse market impact on MicroStrategy announcements, with the average weekly return sitting in slight positive territory.”
MicroStrategy began adding bitcoin to its balance sheet three years ago as a hedge against the Federal Reserve’s then ultra-easy monetary policy. Recently, MicroStrategy’s CEO Michael Saylor said that the crypto market is likely to become BTC-centric due to the recent U.S. regulatory crackdown on the digital assets industry.