JPMorgan warns that MicroStrategy's big debt-fueled bitcoin acquisitions could worsen a downturn.

JPMorgan warned that MicroStrategy's leveraged bitcoin treasure might deepen a slump. According to founder Michael Saylor, Microstrategy wants as much bitcoin as feasible. Mike Novogratz stated that too much leverage in the bitcoin surge could cause a downturn.

Bitcoin has been hitting record highs, but JPMorgan warned that one optimistic firm's enormous investment could worsen a correction.

The analysts lead by Nikolaos Panigirtzoglou wrote on Thursday that MicroStrategy's debt-funded bitcoin acquisitions add leverage and froth to the current crypto surge and enhance the danger of more severe deleveraging in a future downturn.

New spot bitcoin ETFs have attracted new investors, sending the currency above $73,000 this week. Before next month's bitcoin halving, which traditionally drives prices up, others are buying. JPMorgan said MicroStrategy's leveraged bitcoin bet contributed to the rise.

The company, created by crypto bull Michael Saylor, had 205,000 bitcoins worth nearly $14 billion as of mid-March. Saylor routinely boasts ambitions to buy as much bitcoin as possible, making this accumulation a company priority.

"Best investment asset. He told Yahoo Finance that acquiring more Bitcoin is the goal. Whoever gets most Bitcoin wins. No other endgame

JPMorgan reports that MicroStrategy bought $1 billion of bitcoin this year and $1 billion in the fourth quarter. Saylor said the corporation used levered bitcoin assets to finance these acquisitions.

"We use cheap capital — our average cost of capital is like 1.6%, or something in that range — and the combination of leverage, and then offering our shareholders a yield," he explained. JPMorgan analysts said that it plans to provide $500 million of convertible debt to keep buying bitcoin.

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