Expert Takes | Software Giant Takes a Massive Bet on Bitcoin with a $250M Purchase
MicroStrategy, a Virginia-based business intelligence software company that trades on the NASDAQ, recently announced that it has acquired 21,454 bitcoin in what describes as a “capital allocation strategy.”
The move is a novel one for a publicly-traded firm. While many companies put surplus capital into bonds and other investments as part of their treasury management strategies, a bet of this size on bitcoin is all but unheard of.
MicroStrategy, which was founded in 1989, has a market cap of around $1.2 billion and posted a profit of $34 million in 2019. Its clients reportedly include big retailers like Pepsi and Adidas, while IBM and Oracle are among its competitors.
Below are some expert insights from the FinTech and crypto industry on the news and the implications for the industry.
Dave Hodgson, Chief Investment Officer at NEM, a secure enterprise blockchain:
“This move by the largest publicly traded business intelligence company marks an inflection point. MicroStrategy’s CEO Michael J. Saylor has explicitly stated it represents the company’s belief in BTC as a store of value that has superior long term appreciation prospects than FIAT.
This is the latest in a series of moves that indicates the wider spread adoption of cryptocurrency and blockchain technology, including the US government validating that national banks can custody cryptocurrency alongside other asset classes, Goldman Sachs performing a u-turn and becoming pro-cryptocurrency and of course, the first Central Bank Digital Currency being issued by an EU state bank (Bank of Lithuania).
These are all important milestones towards wider institutional and enterprise adoption of a global deflationary currency and monetary system. They also come against a backdrop of many national governments utilising vast “Quantitative Easing” or more simply stated — inflation, to devalue their own national currencies. The USD, for example, has printed the same number of dollars added to circulation in the past 4 months as it had in the preceding 200 years. This marks the first of many moves to seek a more reliable treasury baseline currency than those currently utilised. BTC, by comparison, has a known maximum supply and a known rate of supply increase, that cannot be changed.”
Konstantin Richter, CEO and Founder of Blockdaemon:
“2020 has been a pivotal year for crypto. MicroStrategy, a $1.2 billion firm, bought $250m worth of Bitcoin viewing the asset as a superior to cash. In 2020, we have seen VISA, Mastercard, JPMorgan and now MicroStrategy — a myriad of multi-billion dollar corporate behemoths not only opening up to but embracing crypto.
More institutions will follow suit as the markets witness a surge in Bitcoin tied to the flood of money printed by central bankers in recent months as countries try to forestall the economic crisis triggered by the pandemic. Unlike national currencies, Bitcoin has a finite supply of 21 million, which makes it a hedge against inflation akin to gold. We are moving to an exciting phase for the markets as the foundation for digital asset markets moves from the fringes to become a core offering of financial markets. Overall it is great news for the crypto asset class and portends a major transformation of the crypto landscape.”
