MicroStrategy's cunning plan: why buying bitcoins for $ 489 million did not affect the market

Yuri Mazur, Head of Data Analysis Department, CEX.IO Broker:

On Monday, MicroStrategy announcedpurchasing another 13,005 bitcoins worth about $489 million. Such an ambitious transaction clearly indicates that large investors regard the current price levels of BTC against the US dollar as low enough to profit from the further growth of its quotations. This could signal to the broader market that there are good levels to buy and trigger a new wave of growth.

Impact of the US Federal Reserve on the dynamics of the crypto market

Also don't forgetо том, что сейчас уровень инфляции в экономике The United States has reached its highest level since 2008, which could lead to further devaluation of the US dollar and an increase in its level of investment risk. In this regard, investors will be inclined to look for new capital protection tools, which was clearly manifested after the historical decline in the country's GDP by 32.9% in the second quarter of 2020. A wave of growth followed in gold and bitcoin, which was hastily seen as a good alternative tool for protecting capital from inflationary risks due to its technological structure.

В нынешней ситуации немаловажную роль будет play the monetary policy of the US Federal Reserve. If an aggressive course is taken to contain the fall in the US dollar, this could negatively affect the stock market, as loans will rise in price. The likelihood of a serious correction in the American stock market is also possible, due to which bitcoin can win more. If the FRS does not resort to aggressive monetary actions, the US dollar index may again go down to the levels of the beginning of June this year.

Risky game MicroStrategy

However, we can see that at this timeBitcoin continued its decline despite the acquisition of MicroStrategy. This means that the trading volume to buy BTC was quickly absorbed by the market and bearish sentiment still prevails in the cryptocurrency market. In our opinion, the company is playing a very risky game, continuing to invest in bitcoin after having made its purchase at levels close to historical highs.

The fall may continue or it may happenprotracted consolidation in the region of $ 30 thousand, and MicroStrategy risks not fulfilling its debt obligations to investors on bonds that were issued to buy digital assets.

We believe that the next two weeks will bedetermining the medium-term development of Bitcoin exchange rate dynamics. If there is a fall below $31 thousand – the nearest support level, which was determined based on CEX.IO trading data – the likelihood of a continuation of the correction to $20,000 will increase. If support takes its toll, a return to $50,000 and above will become the dominant scenario.