Aug 13, 2020, 01:52am EDT One Of The Biggest Ever Bets On Bitcoin, Worth A Massive $250 Million, Is Already Paying Off Share to Linkedin
Bitcoin, after a long period in the wilderness , has begun to find its place both on Wall Street and with non-financial companies.
The bitcoin price , up 6% on this time last year, has recently surged after trading sideways since early May—topping $11,000 per bitcoin for the first time since last September as nervous investors brace for a bout of inflation due to huge government spending and cash creation designed to offset the economic damage wrought by the coronavirus pandemic .
Now, the Nasdaq-listed Some investors have recently turned to bitcoin in an attempt to offset the inflation they see coming …[+] as a result of coronavirus pandemic spending.picture alliance via Getty Images
“Our investment in bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders,” MicroStrategy chief executive Michael Saylor said in a statement , adding the company believes bitcoin “is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
Bitcoin is “superior to cash,” according to Saylor, pointing to “macro factors” including the coronavirus pandemic, global quantitative easing measures, political and economic uncertainty, and bitcoin’s technical and qualitative properties.
The MicroStrategy stock price added over 10% to its $1.3 billion market capitalization following the bitcoin purchase announcement, increasing the company’s market value by over $100 million as investors cheered the move that somewhat ties MicroStrategy’s valuation to the price of bitcoin.
The bitcoin price was, however, broadly unmoved by the news MicroStrategy had snapped up 21,000 of the total possible supply of 21 million bitcoin—though that didn’t stop many bitcoin traders and analysts from arguing it is bullish for bitcoin over the long-term.The bitcoin price has climbed so far this year, erasing its March coronavirus-crash losses and …[+] putting bitcoin relatively flat for the year.
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“[MicroStrategy’s bitcoin purchase] serves as further confirmation of the institutional investment thesis of betting on bitcoin as a hedge to stimulus printing as well as global political and economic uncertainty,” Micah Erstling, trader at crypto market maker GSR, said via email.
“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.”
Others in the bitcoin and cryptocurrency community argued MicroStrategy’s bet on bitcoin will have additional benefits, potentially resulting in other companies following in its footsteps.
“MicroStrategy talked about finding a long-term store of value, but companies that adopt bitcoin will discover other major benefits,” Nick Neuman, the chief executive of Colorado-based provider of bitcoin security services, Casa, said via email.
“It can simplify their treasury operations, giving them more control—and more speed—when moving large amounts of money compared to our outdated, legacy payment rails.” Follow me on Twitter .
I am a journalist with significant experience covering technology, finance, economics, and business around the world.As the founding editor of Verdict.co.uk I reported … Read More
I am a journalist with significant experience covering technology, finance, economics, and business around the world.As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle.
I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself.I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others.Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.
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