Bitcoin critic Peter Schiff has raised concerns over the influence of major players like MicroStrategy and Marathon Digital on Bitcoin’s price dynamics. According to Schiff, these firms’ extensive Bitcoin holdings and leveraged investments could lead to price manipulation, artificially inflating Bitcoin’s value. This could have profound implications for the cryptocurrency market and the broader financial system.
Also Read: MicroStrategy Expands Bitcoin Holdings to 423,650 BTC With $2.1B Buy
MicroStrategy and Marathon Digital’s Role in Bitcoin’s Price
MicroStrategy, a business intelligence firm, has become prominent in Bitcoin’s market due to its large Bitcoin reserve. Bitcoin’s price has been supported by this company, which has been very aggressive in the acquisition of digital currency. Likewise, Marathon Digital, operating in crypto mining and headquartered in Nevada, announced that it intends to buy Bitcoin using convertible bonds. Currently, Marathon holds 40,435 BTC, and as of 9 December 2024, the value is roughly $390,000,000.
Critics have turned up their ears regarding Marathon’s latest acquisition strategy, where leveraged funds for the administration of buying bitcoins is considered unsafe. It is essential to note that, recently, the firm floated convertible notes to make the necessary capital to purchase more BTC. This maneuver led to a large amount of Bitcoin appearing in the market, artificially raising it, but there is no desire for this cryptocurrency. The influx of BTC from these large players may create an artificial market environment.
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Yield and Profit from Bitcoin Holdings
Both Marathon Digital and MicroStrategy are enjoying different yields from their Bitcoin investments. MicroStrategy, for instance, has recorded a Bitcoin return of 3.3% from its treasury operations. This has resulted in a net gain of approximately 13,270 BTC for shareholders, worth around $1.3 billion at current prices. Marathon, on the other hand, has accumulated 11,774 BTC, valued at about $1.1 billion. In contrast, Marathon has secured 11,774 BTC worth approximately $1.1 billion. Such profits defined by yields offer immense selfish reasons to both companies to consolidate and secure their claims on Bitcoins.
While these strategies have proven profitable for the companies involved, they have raised concerns about the broader impact on Bitcoin’s price stability. Some experts worry that the massive leverage and large-scale purchases by companies like MicroStrategy and Marathon Digital could lead to unsustainable price inflation, with repercussions for the entire cryptocurrency market.
Also Read: Coinbase Premium Surges Amidst Bitcoin’s Market Sell-Off, Indicating Strong Institutional Buying
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.