Coinbase executed MicroStrategy’s $425M Bitcoin purchase in September 2020

Coinbase, the United States’ largest cryptocurrency exchange, announced that it facilitated one of the largest institutional Bitcoin (BTC) purchases in 2020.

According to an official announcement, Coinbase was selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin in September 2020.

Brett Tejpaul, head of institutional sales at Coinbase, provided more details about the purchase as well as the company’s aim to facilitate institutional purchases in a Dec. 1 blog post.

“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,” Tejpaul said. According to the post, MicroStrategy chose Coinbase because the platform provides a number of market tools like smart order routing and algorithmic trading tools.

According to a case study on the MicroStrategy trades, Coinbase conducted a series of pre-trade calls with MicroStrategy prior to the $425 million purchase in order to better understand trade execution goals and develop a trading plan.

Following the successful test, Coinbase began to execute the larger trade, involving the “Time Weighted Average Price” algorithm to execute the trade over a period of five days.

Over the course of the trade, MicroStrategy had a 9 am call each day with the Coinbase trading team to start trading and report overnight fills. After completing an initial $250 million investment over a period of five days, MicroStrategy went on to invest an additional $175 million in Bitcoin following the success of the first trade, for a total investment of $425 million.

In the post, Coinbase expressed its willingness to help more institutions looking to buy crypto:

“We hope that this is an inflection point for the cryptoeconomy and look forward to helping more corporate companies and institutions looking to diversify their capital allocation strategies with crypto. Working on an agency basis, clients can be sure our interests are aligned as we seek to find the best prices available in the market.”