Reviewing MicroStrategy's 28 BTC Purchases: Is Every Announcement a Signal for a Drop?

Author: Nan Zhi, OdailyNews

Since August 2020, MicroStrategy has announced a total of 28 BTC purchases, accumulating 158,245 bitcoins, with an average holding price of 29,582 USDT.

With each purchase announcement, the following voices often appear on social media:

① MicroStrategy's average purchase price is always higher than the market price at the time of announcement (multiple rescue);

② Whenever MicroStrategy announces the purchase of BTC, the market starts to decline.

This article reviews MicroStrategy's 28 BTC purchases to explore whether there is a certain relationship between MicroStrategy's announcement of BTC purchases and market prices.

MicroStrategy Official Announcement Price Difference Analysis

The price situation of MicroStrategy's 28 BTC purchases is as follows, showing a significant price difference between the "market price at the time of announcement" and the "purchase price" over a certain period.

The proportion of cases where the "market price at the time of announcement" is greater than the "purchase price" is 60.7%, with an average price difference of -1.43%, indicating that MicroStrategy tends to announce purchases after an average decline of 1.43%.

The specific situation of the price difference (absolute value) is as follows:

• 50% of the price differences are within 1,000 USDT;
• 39% of the price differences are between 1,000 USDT and 5,000 USDT;
• There are three instances where the price difference exceeds 5,000 USDT, specifically -5,716 USDT, -5,991 USDT, and -9,931 USDT.

When measured by price difference rate, the conclusions are even more significant:

• 25% of the price difference rates are in the range of 0%-2%;
• 39% of the price difference rates are in the range of 2%-5%;
• 21% of the price difference rates are in the range of 5%-15%;
• 4 instances have price difference rates exceeding 15%, specifically -15.53%, -15.93%, 16.73%, and -17.28%.

MicroStrategy Official Announcement Market Situation Analysis

An analysis of the market situation at various time intervals after MicroStrategy's announcements was conducted, excluding the purchase on September 25, including:

• Time: Comparing different time dimensions such as 1 day, 3 days, 1 week, 2 weeks, and 1 month;

• Market: Selecting BTC, ETH, and the average value of mainstream altcoins (the top 20 non-stablecoins by market cap on CoinGecko, including BNB, XRP, ADA, DOGE, SOL, TRX, DOT, MATIC, LTC, BCH, LINK);

• Price: Based on the closing price for each time period.

The comprehensive results are shown in the table below:

It can be seen that the statement "Whenever MicroStrategy announces the purchase of BTC, the market starts to decline" is not unfounded; all three types of markets show a tendency to decline in the short term. However, when the time frame is extended to one week, the probability of an increase begins to rise, with the ETH market showing the most significant pattern.

On the other hand, the amount (or value) of each purchase by MicroStrategy varies. Using the amount as a weight for weighted calculations better highlights MicroStrategy's judgment, with the calculation formula as follows:

The weighted calculation results are as follows. The decline in the first three days remains unchanged, but the magnitude has decreased, while the profit-loss ratio shows a significant increase afterward, indicating that when MicroStrategy makes heavy bets, the probability of a long-term increase is higher.

Conclusion

The two summarized patterns regarding MicroStrategy indeed align with the statistical results. As the first Nasdaq-listed company to purchase Bitcoin, MicroStrategy, which heavily invests in BTC, completed most of its positions by the end of 2020, having once seen considerable unrealized gains. However, it has only sold Bitcoin once to date. Although it has a short-term counter-indicative nature, its positions demonstrate confidence in the bull market.