MicroStrategy, El Salvador, and the Rise of Strategic Bitcoin Holdings

Michael Saylor’s MicroStrategy has recently announced that they purchased 27,200 BTC worth $2.03 billion between October 31 and November 10. The average price was $74,464 per Bitcoin.

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At this point, MicroStrategy owns 279,420 BTC at an average price of $42,629 per Bitcoin. Back at the start of the year, MicroStrategy had 189,150 BTC, so the company bought 90,270 BTC in 2024.

Overall, MicroStrategy bought its BTC for less than half the current price and is ready for the next leg of the current bull market.

The company’s results are impressive, but the plan behind MicroStrategy’s success is extremely simple. Saylor buys BTC whenever possible and does not sell any of MicroStrategy’s holdings.

Saylor does not pay attention to news, regulatory challenges, political developments, and even the price. MicroStrategy buys BTC regularly and uses its access to traditional financial markets to raise funds to buy more Bitcoin, as simple as that.

A similar strategy is used by El Salvador, which is led by Nayib Bukele. El Salvador started buying BTC in September 2021. Back then, Bitcoin traded near the $51,000 level.

Bukele was heavily criticized for his decision to start buying Bitcoin. The IMF raised worries about the country’s BTC plan, but Bukele did not blink. In November 2022, Bukele introduced a new BTC policy. El Salvador started to buy one Bitcoin per day. This simple idea brought great results, as Bitcoin traded near the $16,000 level at that time.

The key question is when will the simple strategy popularized by Saylor and Bukele get adopted by institutional investors and governments? It should be noted that this idea is slowly gaining momentum. In Japan, an investment firm Metaplanet follows the MicroStrategy route and has already bought more than 1,000 BTC.

The rising number of strategic holders will boost demand for Bitcoin in the future. The catalyst that could send Bitcoin well above the $100,000 level is the emergence of another country that is ready to put BTC into reserves. El Salvador is a small country that cannot make a big impact in the market. A country larger than El Salvador can make a big difference.

In the U.S., Senator Cynthia Lummis is proposing to establish a strategic Bitcoin reserve. To build this reserve, Lummis plans to implement a 1-million-unit Bitcoin purchase program to buy roughly 5% of the total Bitcoin supply. The idea is to mirror the size of gold reserves held by the U.S.

In case such a proposal is implemented, Bitcoin price will skyrocket. However, it remains to be seen whether the U.S. is ready to make a sharp turn from curbing crypto activity to buying BTC for strategic reserves.

The existence of such proposals indicates that countries have started to explore the potential role of BTC as a strategic store of value. The more the Bitcoin price grows, the more countries and investment firms will ask themselves whether they should put it in their reserves and portfolios. This task is easier for individuals, who can implement a Saylor-like strategy at any time since BTC can be bought in small fractions.