Why MicroStrategy is Temporarily Pausing Its Commitment to the Bitcoin USD Price

In response to President Trump’s re-election, the global financial markets are experiencing rapid fluctuations. Amid this political backdrop, publicly traded company MicroStrategy, known for its large Bitcoin holdings, announced an unexpected review of part of its investment strategy. During its latest earnings call, the company set a Bitcoin-to-USD revenue target of $10 billion for 2025, while also indicating a temporary halt to new Bitcoin purchases. Behind this seemingly contradictory decision lie complex factors that go beyond mere market trends.

Changes in Accounting Rules and a New Method for Valuing Bitcoin in USD

To understand the company’s adjustment in purchasing strategy, it is first necessary to recognize the dramatic changes in accounting standards. In Q4 2024, MicroStrategy doubled its Bitcoin holdings but recorded a net loss of $3.03 per share. This unexpected deficit significantly shook investor confidence.

Under traditional accounting rules, if Bitcoin’s price falls below its purchase cost, companies are required to immediately recognize this loss in their financial statements. However, with the introduction of the new FASB standards, the situation has changed. The company can now measure unrealized gains on Bitcoin holdings at fair value and reflect them in its financial statements. This change enhances transparency on the balance sheet but also introduces new tax burdens.

Increasing Tax Complexity and Rebuilding Capital Plans

Under the new accounting standards, MicroStrategy’s unrealized gains on Bitcoin holdings may be subject to the Corporate Alternative Minimum Tax (CAMT, approximately 15%). This unexpected increase in tax liability has had a significant impact on the company’s financial strategy.

Additionally, the company’s inclusion in the NASDAQ 100 index subjects it to stricter insider trading policies and disclosure requirements. Particularly during lock-up periods around earnings announcements, changes in Bitcoin holdings are restricted. For example, the Q4 2024 earnings were announced on February 5, but the lock-up period was in effect from January, which may have influenced purchase activity.

The decision to temporarily halt purchases can be seen as a strategic risk management measure to adapt to these new tax and regulatory environments. It allows the company time to properly prepare for future tax burdens and to develop more efficient capital allocation plans.

Rapid Development of Bitcoin Reserve Strategies by the US Government

Interestingly, at the same time MicroStrategy paused its purchases, a completely different movement is accelerating within the United States. Several states are proposing bills to position Bitcoin as a strategic asset.

Currently, 16 states have submitted related legislation, and this bottom-up movement is spreading rapidly. In February, Kentucky State Senator TJ Roberts proposed HB376, which suggests investing 10% of state funds into digital assets with a market cap exceeding $750 billion. Based on Kentucky’s 2023 general fund revenue, this would mean approximately $1.51 billion invested in Bitcoin.

If all 16 states allocate funds at this level, a total capital inflow of about $24 billion into the Bitcoin market would occur. This amount represents roughly 1.25% of Bitcoin’s circulating market cap. To put it in perspective, it is about 3.24% of the US gold reserves (approximately $740 billion according to the World Gold Council), highlighting the growing importance of government-level Bitcoin valuation.

Structural Changes in the Market Reflected by the Bitcoin USD Price

MicroStrategy’s current holdings exemplify this market shift. As the largest Bitcoin holder globally, as of February 2024, the company owns 450,000 BTC, with an average acquisition price of around $62,000. This amount accounts for approximately 2.38% of the total Bitcoin supply and is equivalent to the US official gold reserves, demonstrating its advanced position in the crypto asset space.

While large-scale purchase halts by corporations may influence market sentiment, the strategic asset accumulation by state governments could serve as a long-term support factor for the Bitcoin USD price. Since the Trump administration took office, Bitcoin’s position has continued to rise at an unprecedented pace within just one month.

Amid these two trends—short-term corporate purchase adjustments and medium- to long-term government asset accumulation—the Bitcoin USD price is poised to transition into a new market phase. This is not merely about price fluctuations but a structural shift indicating the integration of digital assets into the global financial system, making it a crucial development to consider for future investment strategies.