Key Takeaways
Coinbase explained on Tuesday that it took days to make the purchase and limit market slippage.
The San Francisco exchange was the main entity behind the whale-tier BTC purchase.
Led by Bitcoin bull Michael Saylor, Microstrategy now owns over 38,250 BTC.
Share this article
Microstrategy added almost 40,000 Bitcoin to its balance sheet in September 2020, using Coinbase as the primary execution services partner for the purchases.
The company sells business software, but under the direction of CEO and Bitcoin bull Michael Saylor, Microstrategy has invested big in crypto as part of a treasury reserve strategy.
On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.
— Michael Saylor (@michael_saylor) September 15, 2020
Saylor firmly believes that Bitcoin is the most efficient form of value storage available today, particularly since monetary easing policies kicked into high gear during the COVID-19 pandemic.
Coinbase Executes Bitcoin Trade
According to Coinbase’s Brett Tejpaul, the exchange oversaw the BTC purchase without inflating Bitcoin’s price. Coinbase used a combination of human and algorithmic trading, going through both its prime brokerage platform as well as the Coinbase OTC desk to get the job done.
“Our system takes a single large order and breaks it into many small pieces that are executed across multiple trading venues. This type of smart order routing minimizes the trade’s market impact and helps disguise the overall trade size,” says Tejpaul.
The Microstrategy purchase spanned two tranches, first with a $250 million purchase executed over the course of five days in 200,000 separate fill orders.
Coinbase used a time-weighted average price (TWAP) algorithm to handle most of the orders, with an average fill size of less than 0.3 BTC so as not to move the market. According to Coinbase, the exchange saved Microstrategy approximately $4.25 million in slippage costs due to their purchase execution.
In recent years, Coinbase has taken steps to ingratiate itself with institutional traders, offering custody and institutional-grade risk management tools since 2018. Its success with Microstrategy will likely signal other major investors looking for an entity to handle major purchases.
Microstrategy is just one of a series of companies to buy into Bitcoin in recent months, with Jack Dorsey’s Square Inc. investing $50 million in October of this year.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
How Microstrategy CEO Turned “Scary” Bitcoin Investment In…
Michael Saylor, CEO of Microstrategy, recently made headlines for revealing that he personally owns $245 million worth of Bitcoin. His company’s stash is nearly double that. Under Saylor’s leadership, Microstrategy…
MicroStrategy Invests Another $175 Million in Bitcoin, Pushing Holding…
MicroStrategy, a U.S. business intelligence company, released a K8 form informing the SEC and the public that the company may increase its Bitcoin holdings beyond the initial $250 million investment…
Managing Emotions
For almost everyone, having skin in the game, or a vested financial interest in something will stir up emotion. If a trader or investor is unable to manage their emotions,…
MicroStrategy Outperforms Nasdaq Composite After $175 Million Bitcoin …
MicroStrategy (NASDAQ: MSTR) stocks rose over nine percent as their CEO revealed the company had purchased another $175 million in Bitcoin. The investment makes up part of the firm’s strategy…