JPMorgan Sounds Alarm Over MicroStrategy’s $20B Bitcoin Acquisition Spree

JPMorgan issued a warning regarding MicroStrategy’s recent $2 billion Bitcoin (BTC) acquisitions within six months. The organization emphasized that MicroStrategy’s Bitcoin buying spree could expedite any potential downturn, which poses a massive risks to the crypto market’s stability.

JPMorgan Issues Warning Against MicroStrategy’s Bitcoin Purchase

In a recent investor note, JPMorgan wrote, “We believe debt-funded Bitcoin purchases by MicroStrategy add leverage and froth to the current crypto rally and raise the risk of more severe deleveraging in a potential downturn in the future.”

MicroStrategy purchased $821 million worth of Bitcoin between February 26 and March 10 after selling $1.2 billion in senior convertible notes earlier this year. These senior convertible notes, which MicroStrategy issued, are considered debt securities and can convert into company shares.

During the current crypto bullish run, BTC reached an all-time high of over $73,800 before slumping around $67,100. Hence, JPMorgan’s concerns underscore the market’s vulnerability. The organization added, “The sale of convertible notes shows that the company, by appearing to transform itself to a leveraged bet on Bitcoin, has also played a part in amplifying the rally.”

Under the leadership of BTC enthusiast Michael Saylor, MicroStrategy has continued its aggressive pursuit of Bitcoin acquisitions. This marks a strategic shift towards becoming a “Bitcoin development company.”

Moreover, MicroStrategy currently holds 205,000 Bitcoin valued at nearly $14.7 billion, making it the leading private holder of the largest cryptocurrency. Whilst, JPMorgan’s warning aligns with its CEO Jamie Dimon’s anti-Bitcoin narrative as the organization spotlighted potential risks of MicroStrategy’s Bitcoin acquisition.

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BTC Price Crashes To $67,000

The Bitcoin price peaked at around $73,836 on March 14 before plunging significantly today. At press time, the BTC price plummeted 6.77% to $67,788.10 on Friday, March 15. Whilst, the crypto held a market valuation of $1.33 billion. On the contrary, the 24-hour trade volume for BTC skyrocketed 91.58% to $85.95 billion.

Amid such market sentiments, JPMorgan’s warning serves as a crucial reminder. Moreover, if their analysis comes true, a further slump could be expected. The recent drop in the Bitcoin price is being linked to a surge in inflation rates, particularly as reflected in the Producer Price Index (PPI) reported by the US.

In February, the PPI, encompassing raw material costs dictating selling prices, surged by 0.6%, surpassing the projected 0.3%. Furthermore, this unexpected inflation uptick is likely under close scrutiny by the Federal Reserve during their March meeting.

Additionally, a notable liquidation event is cited as another factor contributing to the decline in BTC price. Coinglass data reveals that $282.54 million were liquidated, with $225.40 million stemming from long positions within the last 24 hours. This significant liquidation further compounds the downward pressure on Bitcoin’s value.

Also Read: Crypto Price Prediction: ‘Buy The Dip’ Mood Strikes As BTC Drops Below $70k