MicroStrategy will soon beat Grayscale in terms of Bitcoin holdings if it continues to buy.
The company's aggressive buying strategy has positioned it as a major player in the market.
The broader crypto market has seen a surge in inflows with several positive indicators.
Analysts are predicting a bullish fourth quarter for Bitcoin.
MicroStrategy is mostly known for its aggressive Bitcoin buying strategy. But what happens if it continues to buy?
Quite a few things will. One of these is that it is becoming more likely to beat Grayscale soon in terms of Bitcoin holdings.
This is especially true considering its preparation for the next major acquisition.
According to recent filings (and the SaylorTracker website), the company currently holds 252,220 bitcoins.
This staggering amount of Bitcoin is about 1.2% of its total supply, which is capped at 21 million.
Grayscale on the other hand, holds just over 254,000 BTC across its GBTC and its lower-fee Bitcoin Mini Trust.
Microstrategy currently sits on more than $1 billion In available funds, which it will likely use to buy more Bitcoin.
Buying more BTC with such a large amount will likely push its holdings beyond Grayscale's.
It would also solidify the company’s position as one of the top Bitcoin holders globally.
In fact if we see another Bitcoin purchase, MicroStrategy will become the fifth largest holder of the cryptocurrency In the world, aside from other heavyweights like BlackRock, Binance, Satoshi Nakamoto and Coinbase.
It is also interesting to note that these institutions hold their BTC on behalf of clients. MicroStrategy on the other hand, holds its own outright.
The company’s buy-craze started in August 2020 under the leadership of its CEO at the time, Michael Saylor.
Saylor now serves as executive chairman, but the company is still keeping things running.
The company initially used its balance sheet to buy Bitcoin. However it now uses capital markets to raise billions several times in a year.
The company’s average purchase price for Bitcoin sits at around $39,000—which is well below the current market price of $64,000.
Holdings from MicroStrategy
This means that MicroStrategy is currently in profit, and its holdings are now worth approximately $16 billion.
Grayscale, on the other hand, is now struggling to maintain its dominance.
The company’s decision to keep the management fee for its GBTC at 1.50% has led to a decline in its AUM.
Even though its lower-fee Bitcoin Mini Trust has seen some success (with 33,753BTC), the company is still far from reclaiming its previous position.
In addition to this buying trend from MicroStrategy, the overall crypto market is showing signs of an incoming rally.
This is especially true as Bitcoin broke its trend of historically poor Septembers.
Within the month, crypto investment inflows reached $1.2 billion. This marked three consecutive weeks of positive growth since 9 September according to data from CoinShares.
Inflows by asset
This surge in investment is likely because of the major macroeconomic developments within the month.
CoinShares data shows that Bitcoin led the inflows with a massive $1.07 billion. Ethereum came next with inflows of $87 million despite strong outflows in earlier months.
Even short-Bitcoin products saw inflows of around $8.8 million within the month.
The US leading the charge.
In terms of regional differences, the US led the charge with $1.17 billion.
Majorly, analysts believe this was because of positive economic data in the month.
Chief of this was the Federal Reserve’s recent 50 basis point interest rate cut which boosted the appeal of riskier assets like Bitcoin.
The approval of options trading for Bitcoin ETFs in the U.S. also further fueled market optimism.
BlackRock’s Bitcoin ETF recently gained approval for options trading from the SEC:
A move that was hailed by Bloomberg ETF analyst Eric Balchunas as a "Huge win for the bitcoin ETFs".
With the US now embracing digital assets, optimism is at an all-time high with BlackRock’s Ethereum ETF (ETHA) also joining the $1 billion club.
These factors contributed to the massive surge in inflows.
Traders and investors are now hopeful for a broader market recovery as October matures.
This isn't all for Bitcoin. Looking ahead to the start of the fourth quarter, hedge funds and analysts are now predicting bullishness for Bitcoin.
Bitcoin has historically struggled in September. However, this year’s strong close has defied expectations.
As a result, ZX Squared Capital now believes that the upcoming US elections will further strengthen the cryptocurrency’s position.
Analysts like CryptoRover also believe that we are likely to see a strong Q4 performance for Bitcoin.
This is based on factors like 2024 being a halving year.
Typically in halving years, Bitcoin tends to rally by as much as 10.95% in Octobers.
It also rallies by between 20% - 28% on Novembers and Decembers. With this in mind, the flagship cryptocurrency could be headed for a massive upside season.
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