Business intelligence software firm MicroStrategy Inc. has dramatically increased its exposure to the cryptocurrency bitcoin, pushing its stock up more than 350% over the last year.

According to a report today by Reuters, MicroStrategy’s stock has risen in line with, but considerably more than, the value of bitcoin itself, which has gained more than 160% in the year to date on expectations of the approval of a bitcoin exchange-traded fund in the U.S.

The company’s enormous exposure to bitcoin is the main factor backing the performance of its stock, analysts say. According to Cointelegraph, MicroStrategy and its subsidiaries reportedly hold 189,150 BTC at a combined purchase price of $5.9 billion, and an average purchase price of $31,168 per BTC. Between Nov. 30 and Dec. 26, the company and its subsidiaries purchased about 14,620 bitcoins at an average price of roughly $42,110, according to a regulatory filing.

Some analysts have said MicroStrategy’s stock has essentially become akin to a “leveraged bitcoin ETF.” The company has used a combination of long-term, low-interest debt and share issuance to finance its crypto purchases. As of Sept. 30, the company’s total liabilities were $2.534 billion, down almost 8% from the prior year.

In recent months, a spate of filings, including from traditional finance heavyweights such as BlackRock Inc., have revived the crypto markets. They had been crushed after several high-profile firms, such as Sam Bankman-Fried’s FTX Inc., collapsed. A spot crypto ETF would track the market price of the underlying crypto asset, giving investors exposure to the token without having to buy the currency. The prospect of a bitcoin spot ETF being approved is believed to be one of the major factors behind crypto’s revival this year.

MicroStrategy co-founder and Executive Chairman Michael Saylor has been a vocal advocate of bitcoin for years, and makes no secret of his belief that it’s unwise to save in a fiat currency that is constantly debased. He sees bitcoin as a safer, liquid asset that doesn’t suffer from dramatic supply inflation, unlike fiat.

MicroStrategy is a provider of business intelligence software, artificial intelligence applications and cloud-based services. Its main product is focused on data analytics and used for visualizing data-driven insights. Because it’s so heavily exposed to bitcoin, its balance sheet is more closely tied to the volatility of crypto markets.

Analysts say the U.S. Securities and Exchange Commission will make a decision on whether to approve the first bitcoin spot trading ETFs in early January. If the SE grants approval, it’s likely to drive a further increase in bitcoin’s value as it will pave the way for much broader range of investors to explore the cryptocurrency for the first time.

Photo: MicroStrategy