Coinbase Faciliated MicroStrategy’s $425M Bitcoin Purchase Without Moving The Market
The leading US-based cryptocurrency exchange Coinbase assisted in MicroStrategy’s massive purchase of $425 million worth of BTC. The platform pledged to help other large firms diversify their portfolios with bitcoin in the future as well.
Coinbase Involved In MicroStrategy’s BTC Purchase
The NASDAQ-listed business intelligence firm made the news on two occasions earlier this year as it announced the total purchase of 38,250 bitcoins. At the time, this sizeable amount equaled about $425 million.
However, the entity that helped broker the deal remained unknown until today. The San Francisco-based crypto exchange Coinbase announced that it was “selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin.”
The community speculated on how such a considerable amount didn’t move the markets as the price of BTC remained relatively still back then. Coinbase explained that this was the company’s intention in the first place:
“Using our advanced execution capabilities, leading crypto prime brokerage platform, and OTC desk, we were able to buy a significant amount of bitcoin on behalf of MicroStrategy and did so without moving the market.”
Furthermore, the exchange noted that its 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 reduces the trade’s impact on the market and assists in disguising the overall trade size.
This also helped MicroStrategy to get a better price for its BTC purchase as Coinbase’s trading team “achieved an average execution price that was less than the price at which the buying started.” The post highlighted that this strategy ultimately saved 1% (or about $4.25 million) for the NASDAQ-listed company.
More Large Companies To Come?
MicroStrategy’s purchase kicked off a wave of large companies and prominent individual investors who expressed willingness to get in bitcoin as well.
Jack Dorsey’s Square followed with a $50 million BTC allocation. More recently, the Wall Street giant Guggenheim Partners filed a document with the SEC to purchase about $500 million worth of bitcoin for one of its funds.
Coinbase asserted that more firms will look to BTC to hedge or diversify their excess cash. Consequently, the large US exchange will “look forward to helping more corporate companies and institutions looking to diversify their capital allocation strategies with crypto.”
