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- MicroStrategy is prepared to add more Bitcoins to its digital portfolio
- Through the sale of junk bonds, the business intelligence firm has raised $500 million
- Michael Saylor has plans to purchase $488 million worth of Bitcoins
- Two subsidiaries of the firm have been established in order to manage existing Bitcoins and guarantee the latest sold bonds
- The bonds are expected to mature after seven years
- The news of adding more BTC by the firm would give BTC its bullish momentum back
MicroStrategy has remained a bigger Bitcoin advocate institution since last year. The business intelligence firm is the first institutional investor that adopted Bitcoin. Since last year the firm has acquired several Bitcoins at several price points in its digital investment portfolio. However, Michael Saylor, the CEO of MicroStrategy, has plans to add more flagship crypto assets to the firm’s portfolio.
In recent developments, MicroStrategy had sold corporate bonds worth $500 million. Notably, the announcement of the plans came with the new subsidiaries of the firm.
MicroStrategy remained a crypto advocate
MicroStrategy holds about more than 92k bitcoins. The entire stash was acquired at several different price points. It is known that the firm had purchased the stash for about $2.5 billion. In April, the value of the investment surged to more than $5 billion. However, in the recent crypto market crash, the acquisition value was known to have fallen to approximately $3.4 billion.
Read More: MicroStrategy plans to raise funds and increase its Bitcoin stash
Read More: MicroStrategy CEO Says Bitcoin is ‘Sound Money’ For All
In the recent market crash, BTC lost more than 50% of its value. Following the scenario, Saylor planned to offer a senior secured note. However, the bonds were planned to provide a few of the qualified investors only.
Michael Saylor is prepared to take another dip
On Monday, it was revealed that MicroStrategy had sold all the corporate bonds. Notably, the firm is now having $500 million from the proceeds of the sales. With the proceeds, the firm is now ready to acquire more Bitcoins.
More BTC worth $488 million will soon be available on the 32-year-old business intelligence service provider’s balance sheet.
Two new subsidiaries of the firm
MicroStrategy LLC and MicroStrategy Service Corporation are the two subsidiaries of the firm established with the BTC acquisition plan.
When the plan for the bond sale was introduced, the main question arose regarding the guarantee for the bonds. To solve the issue, the firm established MicroStrategy Service Corporation. It is known that the firm will be providing the guarantee to the latest sold bonds.
Moreover, to back the corporate notes, Saylor mentioned that they are going to be secured on a senior security basis with the firm’s existing assets. The backup assets also include Bitcoins purchased from the proceeds of the bond sale.
On the other side, to manage the existing BTC stash, the firm had established MicroStrategy LLC. Indeed, this firm’s subsidiary will hold and manage 92,079 BTC that is worth more than $3.4 billion currently.
When will the sold bonds mature?
It is expected that the corporate bonds will mature after seven years of purchases. Notably, as per the terms and policies, it is found that the bonds can not be bought back after maturity for at least three years. On the other side, there are few rumors that Jeffries Financial Group Inc is going to be the only book-runners in terms of the deal.
On the other side, it is also known that the bondholders will be able to earn approximately 6.37% to 6.5% interest. It is also noteworthy that the average bonds of such a category provide only up to 4.01%.
Bitcoin could soar in the short term
In the current scenario, Bitcoin is trading near the level of $40k. Over the past seven days, the coin’s price has increased by more than 20%. The recent tweet clearing the stance regarding BTC by Elon Musk is one of the reasons behind the bullish momentum of the currency. However, following the scenario, if MicroStrategy purchases another stash, it would gain more value. Ultimately, the Bitcoiners will see a short-term bullish rally.
