BI Titan MicroStrategy Buys 0.1% Of All Bitcoin

August 11, 2020

The day after we reported on financial giants entering the crypto space, one Nasdaq titan bought up 21,453 bitcoins at $250 million, marking Bitcoin as their primary reserve asset. MicroStrategy, a business intelligence company, made this monumental investment as part of an ongoing strategy to trade in alternative assets. This figure represents 20% of their Total Enterprise Value.

“This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash…” 

– MicroStrategy CEO Michael J. Saylor.

 

Bitcoin as A Legitimate Hedge Against Inflation

While gold is seen as a traditional “safe haven” asset, bitcoin is now being touted as the new digital gold and a preferred currency for hedging against inflation.

“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it.”

– MicroStrategy CEO Michael J. Saylor.

This reputation as “digital gold” has been echoed by many, including legendary macro investor Paul Tudor Jones, who also bought bitcoin as a hedge against inflation that’s impending as a result of large quantitative easing and unlimited money-printing from the Fed (due to the coronavirus pandemic). 

As the U.S. Federal Reserve continues running the money printing machine, many companies and investors alike traded in their dollars before they lose value. With this backdrop, MicroStrategy sees massive upward adoption in digital currencies as more people become aware of the frailties of traditional money and grow to understand the inherent value of bitcoin.

“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value.”

 

What Effect Has This Had on the Market?

Bitcoin bulls have naturally been sharpening their horns as news of this huge trade was announced. In the short term, however, the bitcoin price was broadly unmoved by this trade. However, many bitcoin analysts and traders say the move is bullish for bitcoin in the long-term.

“The longer-term bull case for bitcoin remains strong, and will continue to build as developments like these continue to emerge, alongside what seems to be an ongoing free flow of fiscal stimulus.” – Micah Erstling, trader at crypto market maker GSR. 

Although not every company will be able to copy this strategy due to bitcoin’s scarcity, it’s likely that seeing such a big swing by a Nasdaq limited company will pave the way for more companies to urgently consider adding bitcoin to their portfolios.

The London-based digital asset management firm, CoinShares, even recommended investors allocate 4% of their portfolios to bitcoin, stating: “bitcoin, in its growth phase, behaves like a tech stock.”

While the dust hasn’t settled on MicroStrategy’s move into bitcoin just yet, the weight this kind of investment carries hasn’t gone unnoticed. On the road to mass adoption of cryptocurrencies as a replacement to fiat, this could be seen as a landmark moment.

Thanks for reading. For more blogs on all things Bitcoin, you can read more here. If you’re looking to buy Bitcoin in Canada, find out how here.

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