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Tuesday, November 28, 2023

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Bitcoin investor MicroStrategy was massively hit by the price drop

MicroStrategy, a business intelligence software company, is one of the best-known investors in Bitcoin (BTC). Since 2020, the company has been aggressively buying BTC, making its shares a proxy for BTC. As of the end of 2021, MicroStrategy held 124,391 bitcoins, acquired for roughly $3.75 billion at an average price of about $30,159 per bitcoin, CEO Michael Saylor announced on Twitter at the time. They were worth about $4.3 billion at the current price level of $35,000.

The ongoing BTC correction hits MicroStrategy badly. As of 24 Jan 2022, BTC’s price is around $35,000 down almost 50% from its all-time high of nearly $70,000 in Nov 2021. Shares of MicroStrategy tumbled 17.8% Friday afternoon after the U.S. Securities and Exchange Commission (SEC) rejected the company’s bitcoin accounting strategy. The SEC told MicroStrategy in a filing on Dec. 3 that “…we object to your adjustment for bitcoin impairment charges in your non-GAAP measures. Please revise to remove this adjustment in future filings.

The company’s stock had been falling in tandem with the BTC price. MicroStrategy shares are down 24.7% for the week. Analysts have highlighted that a further decline in the price of BTC could destroy MicroStrategy‘s equity.

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