Nasdaq-Listed MicroStrategy And Others Wary Of Looming Dollar Inflation, Turns To Bitcoin And Gold
Which Other Publicly-Traded Companies Will Or Have Added Bitcoin To Their Balance Sheets? Nasdaq-Listed MicroStrategy And Others Wary Of Looming Dollar Inflation, Turns To Bitcoin And Gold
Publicly traded business intelligence company MicroStrategy said it will invest $250 million of its excess cash in bitcoin, gold and other “alternative assets” over the next 12 months as a hedge against U.S. dollar (USD) inflation.
* CEO Michael Saylor, who unveiled MicroStrategy’s new capital allocation strategy on a July 28 earnings call, said the weakening USD is no longer a tenable place to park MicroStrategy’s sizable cash reserves. (The firm is sitting on $500 million).
* Near-zero interest rates, infinite helicopter money and the specter of coming inflation are all forces Saylor said are chipping away at the dollar. “It wouldn’t be prudent to continue to hold a large portion of USD” in the current environment, he said.
* While USD yield has effectively gone negative, bitcoin, gold and silver have been gaining strength, even if they may prove more volatile havens, Saylor said. He said bitcoin’s 21 million hard cap bolsters the cryptocurrency’s appeal as an inflation hedge.
* “It makes sense to shift our treasury assets into some investments that can’t be inflated away,” Saylor said.
* Saylor indicated his bitcoin revelation came after his firm sold the domain “Voice.com” to crypto project Block.One for $30 million in July 2019.
3 Reasons Why MicroStrategy Adopted Bitcoin — And Why Others Will Too
The CEO of the company that just bought 21,454 BTC calls it “digital gold,” and the tide will cause the business world to admit the same, say supporters.
MicroStrategy has adopted Bitcoin (BTC) as its reserve currency — and stunned commentators by purchasing over 21,000 BTC on Aug. 11.
The world’s largest publicly-traded business intelligence company has swapped fiat for Bitcoin as its treasury reserve asset, but the reasons behind it suggest that more big businesses will have no choice but to do the same.
Why did MicroStrategy choose Bitcoin, and will others follow?
In a press release issued on Aug. 11, CEO Michael Saylor went further than most by calling Bitcoin “digital gold.”
With no “ifs” or “buts,” Saylor unreservedly plugged the largest cryptocurrency over both fiat and other traditional safe-haven assets such as gold.
“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it,” he commented.
That angle closely mimics some of Bitcoin’s foremost proponents, notably Saifedean Ammous, who in his book, “The Bitcoin Standard,” repeatedly explains that so-called “digital scarcity” puts Bitcoin in a separate league to any other form of money which has ever existed.
Like Ammous, Saylor also believes that Bitcoin’s very structure will ensure that its value will only increase with time.
“We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”
Doubts Over Fiat’s Future
Bitcoiners were particularly excited about MicroStrategy because it unashamedly replaced fiat currency for cryptocurrency.
Its purchase of 21,454 BTC for an aggregate price of $250 million late last month may not only be symbolic (given the total 21M BTC) but it also means that the company controls 0.1% of the total Bitcoin supply — something competitors will find increasingly expensive to replicate.
“MicroStrategy bought 0.1% of the Bitcoin supply. Very few companies will be able to copy this strategy,” What Bitcoin Did podcast host Peter McCormack tweeted in response.
For Saylor, there were multiple red flags that swayed him to turn to Bitcoin.
These were “among other things, the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty,” he said.
Continuing, He Argued That What Began As A Result Of Covid-19 Would Only Cause Further Problems Later On:
“We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.”
Cointelegraph has often reported on the detrimental impact of practices such as quantitative easing, and the voices urging consumers to abandon the fiat system en masse to protect their prosperity in the long term.
For Jason Yanowitz, founder of financial media network BlockWorks Group, Saylor’s reservations will ultimately spark trailblazing from the entire business sphere.
“MicroStrategy’s CEO said they bought Bitcoin to avoid inflation,” he summarized.
“Eventually every public company will do the same.”
This week, Cointelegraph noted that Bitcoin’s value appeared to be tracking central banks’ inflating balance sheets in 2020.
Bitcoin’s “Schelling Point”
Finally, Saylor was highly complimentary about Bitcoin in particular — and did not mention that the company even considered any other cryptocurrencies.
“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,” he said.
Bitcoin’s eleven-year lifespan has seen it both remain the largest cryptocurrency and fend off multiple concerted efforts to undermine it.
As Ammous and various others often explain, Bitcoin has proven itself via this method — and alternative cryptocurrencies have failed to demonstrate that they can gain Bitcoin’s status and popularity.
Miners’ preference for BTC supports the theory that in the long term, security and market prowess will only increase — Bitcoin’s technical fundamentals remain in a broad uptrend, a result of miners dedicating more and more resources to the network.
MicroStrategy Buying Bitcoin Shows Institutional Investors Seek To De-Risk
Wall Street firms are waking up to the prospect of holding Bitcoin as a hedge against uncertainties in the mainstream equities market.
Bitcoin (BTC) adoption by big-money players is once again on the agenda following the recent $250 million BTC purchase by MicroStrategy. Industry commentators have also stated that corporations plugging into Bitcoin will provide prominent tailwinds to push BTC valuation to new heights.
With the coronavirus pandemic adversely impacting economies around the globe, investors appear to be looking toward safe haven assets. Indeed, the attention on both BTC and gold is causing a significant coupling of their respective price actions, given that central banks continue to pursue aggressive quantitative easing. With a firm like MicroStrategy hedging with Bitcoin, it appears this pivot might now spread to Wall Street.
Reports of the Trump administration looking to delay the collection of Social Security payroll taxes are also ringing alarm bells in the United States. The likely outcome of this executive order is more money being printed to fund the country’s social security, which consequently means further U.S. dollar debasement.
Well-Established Retail Adoption
Since the start of 2020, the number of addresses holding 0.01 BTC and 0.1 BTC has been climbing steadily, while data from market intelligence platform Glassnode claims the number of “wholecoiners” — wallets with at least 1 BTC — has also increased in 2020, all highlighting a consistent culture of “stacking sats” by various groups of investors.
When the U.S. government sent stimulus payments to the public in April, Coinbase reported a spike in BTC purchase sums to the tune of $1,200 — the exact amount in the checks. The Bitcoin bought with $1,200 at the time is now worth over $1,600, resulting in gains made by BTC over a weakening USD during the period. Even when Bitcoin dipped to $3,800 during the “Black Thursday” market crash, exchanges reported an uptick in retail BTC buying.
Platforms like Square’s CashApp are even taking advantage of the stacking sats culture, with features aimed at automating periodic micro BTC purchases. Studies show that dollar-cost averaging — the practice of dividing total investment across fixed intervals — assures positive returns for Bitcoin investors, irrespective of volatile price action. Thus, the events of 2020 so far suggest that Bitcoin is being viewed as a viable safe-haven asset.
Microstrategy Buys $250 Million In Bitcoin
On Aug. 11, MicroStrategy — the world’s largest business intelligence firm — purchased 21,454 BTC, valued at $250 million. The move saw MicroStrategy swapping cash for BTC as its treasury reserve asset in what industry commentators say could be a watershed event for Bitcoin institutional adoption.
MicroStrategy CEO Michael Saylor echoed the sentiments espoused by many BTC proponents, stating in a press release: “Bitcoin is digital gold — harder, stronger, faster, and smarter than any money that has preceded it.”
Saylor’s comments offer a snapshot of how Bitcoin’s perception on Wall Street appears to be changing. Back in December 2013, when one BTC was worth $520, the MicroStrategy CEO was not sold on its value proposition:
Indeed, 2020 has seen Wall Street figures taking a significant interest in Bitcoin. Billionaire hedge fund investor Paul Tudor Jones revealed back in May that 1% of his total assets in BTC are a hedge against inflation, tipping Bitcoin to become the de-facto leader in the emerging global financial landscape.
Despite dismissing BTC as an investment asset earlier in the year, Goldman Sachs is reportedly looking into client requests for cryptocurrencies in another 180-degree turn.
Brian Kerr, CEO of DeFi banking service Kava Labs, told Cointelegraph that businesses now more than ever need robust risk-management planning: “It’s the job of every corporate’s finance department to manage risk.” He added, “It’s a bit irresponsible of treasury departments if they are not considering Bitcoin to hedge risks of their assets.”
Konstantin Anissimov, CEO of crypto exchange platform CEX.IO, highlighted to Cointelegraph the implications of a listed company investing in Bitcoin:
“What is really important here is that a listed company with strict requirements for financial diligence to the shareholders has taken a substantial position in BTC, announced it publicly (as it should do) and has taken a strong position that this move will not have a detrimental effect to the share price or their corporate social responsibility. If this position was taken by a private business, albeit large, then this would not be such a major pivotal piece of news.”
The Bitcoin purchase announcement also had a positive impact on MicroStrategy stock, as it surged by 12%.
Bitcoin As A Treasury Asset
Back in June 2020, crypto research firm Messari estimated that institutional investors allocating 1% of their capital in Bitcoin could drive the BTC spot price to $50,000. Such a surge will see Bitcoin’s market capitalization reach the $1 trillion mark, similar levels to commodities such as the bullion.
A publicly-listed company like MicroStrategy holding Bitcoin as a marketable investment on its corporate balance sheet certainly falls into that same category of institutional investment.
The move also signals an emerging sense of Bitcoin as a more mature asset than it was in previous years, according to Anissimov. “The market now has a substantial proportion of professional trading houses and institutional investors, which dampens the volatility and increases the liquidity in the market. Regulation is also more mature in certain jurisdictions,” he said.
For Ruben Merre, CEO of crypto hardware wallet NGRAVE, Bitcoin’s improving fundamentals such as the meteoric rise in its hash rate over the years and the spread of trading activity are a testament to its maturity. For Merre, investors see Bitcoin as a way to diversify their investments, as there’s a growing mismatch between the stock market and the economic realities on the ground:
“Stimulus spending has a strong effect on stock market prices and even bubble behavior. Meanwhile, economic growth isn’t fully following the pricing, so there is a mismatch. The risk/reward ratio doesn’t make much sense, you might argue. It’s therefore important for institutional investors to diversify.”
More institutional involvement in Bitcoin will likely enhance the maturity of the asset and improve its overall appeal even further. Corporations also wield considerable lobbying power and push favorable regulations that will trigger more growth in the still-nascent crypto scene.
But the sheer volume of the buying positions associated with big-money investors can also cause a new wave of FOMO in the retail space. Given that new coin distribution decreased after the May 2020 halving, demand may outstrip Bitcoin supply, which should exert upward pressure on the spot price.
Potential For Huge Upside
Another interesting aspect of MicroStrategy’s Bitcoin purchase is that it constitutes a direct exposure to the asset, as Saylor believes Bitcoin has “more long-term appreciation potential than cash.” Usually, institutional interest in BTC involves indirect investment via shares in hedge funds or derivative contracts, so holding Bitcoin either via self-custody or through third-party custodians has not been popular.
However, with improving regulatory clarity, this trend might be due for a change. Back in July, the Office of the Comptroller of the Currency granted approval for federally chartered U.S. banks to provide crypto custody service. The news will see national banks in America join the growing trend of large banks extending their custodial services to cryptocurrencies, thereby helping out the big-money investors, who, by law, must store investment assets with approved third-party custodial platforms.
Direct exposure to Bitcoin does come with certain risks given the intermittent volatility of the largest crypto by market capitalization. However, the potential upside for investors who hold significant positions does exist amid expectations of the spot price setting a new all-time high. As Kerr opined, many believe Bitcoin to represent “a call option on the current financial system in that it may be a sunk cost and go to zero, but the upside is tremendous if it happens.”
Bitcoin is no stranger to a parabolic advance within a bull cycle which usually happens over a few months in contrast to the more measured gains for the likes of gold and silver. For Anissimov, this potential return on investment is providing an enticing incentive for institutional players that are keen on riskier alternatives.
So, most seemingly agree that the influx of institutional money into Bitcoin will cause the spot price to climb further. In a note to Cointelegraph, Nisa Amoils, managing partner at crypto hedge fund Grasshopper Capital, summed up the investment thesis of BTC:
“People are looking for a way to protect their wealth or that of their shareholders. Bitcoin has always served as a great tool for that purpose. It is sound money built for a digital world. The provable scarcity of Bitcoin will lead to a higher US dollar value as demand for the artificially capped supply sees material increases in demand.”
Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin
An Ottawa-based graphics software firm, Snappa, announced Monday its decision to move a significant amount of its cash reserves into bitcoin, citing concerns of inflation and global economic uncertainty.
* Co-founder Christopher Gimmer told CoinDesk in a private message, “The allocation itself represents 40% of our cash reserves.” The company did not mention the number of bitcoins it currently holds, however, which Gimmer explained was a decision made “for privacy reasons.”
* The initial 40% allocation is only the beginning for the seven-person startup. “We’re still accumulating coins, and we don’t plan on selling anytime soon,” Gimmer told CoinDesk. “If we’re right about where bitcoin is heading then our allocation could get very high.”
* In a blog post, Gimmer explained his company’s belief that traditional savings accounts are inferior to other options for growing cash reserves. “I believe we now have a far superior savings technology available to us,” Gimmer wrote. “That technology is Bitcoin.”
* Gimmer also mentioned the recent decision by MicroStrategy to move $250 million into the leading cryptocurrency, which he described as “fascinating.”
MicroStrategy Board Makes Bitcoin Its Primary Reserve Currency, May Increase Its Holdings Beyond $250M
MicroStrategy has outperformed the Nasdaq since buying BTC. Now, it’s doubling down.
MicroStrategy’s board of directors elected to make Bitcoin (BTC) the company’s primary reserve asset. The United States Securities and Exchange Commission disclosure stated that this may lead to the future expansion of the company’s cryptocurrency holdings beyond the original purchase of 21,454 BTC, equivalent to $250 million:
“Bitcoin serving as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business for Cash Assets, including future potential share repurchase activity. As a result of this new Policy, the Company’s holdings of bitcoin may increase beyond the $250 million investment that the Company disclosed on August 11, 2020.”
In the press release that accompanied the company’s original acquisition of Bitcoin, MicroStrategy’s CEO, Michael J. Saylor, was quoted as saying:
“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.”
The move has already caused a slew of copycats, with smaller companies of every shape making similar announcements. It should be noted that MicroStrategy sold a domain to Block.one in 2019 for $30 million.
Perhaps this gave the company’s leadership an appreciation of the value of cryptocurrency. Some of the world’s biggest institutional investors have a stake in the company. This may demonstrate how much more acceptable Bitcoin has become on Wall Street in the past few years.
Since making its original Bitcoin acquisition a month ago, MicroStrategy has outperformed the Nasdaq composite index.
MicroStrategy’s Now-Bullish CEO Explains Why He Bashed Bitcoin Back In 2013
He was shocked that the comment had been uncovered at all.
Back in 2013, Michael Saylor, CEO of business intelligence giant MicroStrategy, posted a tweet against Bitcoin (BTC), forecasting a grim future for the asset. Fast-forward to 2020, during which Saylor’s company now holds a major bullish position in BTC.
#Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.
Following the company’s move into BTC, Twitter posts began surfacing showing a 2013 tweet from Saylor in which he compared Bitcoin to the allegedly dying online gambling fad. It may be worth noting thatonline gambling has not died either in the time since the tweet.
Once Saylor tipped MicroStrategy’s hand regarding the BTC acquisition this year, the crypto industry responded to the evolution of his mindset with what Saylor called “kind ribbing.”
“I’m really ashamed to say — I didn’t know I tweeted it until the day that I tweeted that I bought $250 million worth of Bitcoin,” Saylor said of his 2013 anti-Bitcoin tweet.
“Then I discovered the hive mind crypto-Twitter consciousness where, all of a sudden, they all went through all my tweets, they found it, they reminded me of it, they compared it.”
Saylor remembers he loved hopping on Twitter around the 2013 time frame, saying he would often tweet out his opinions on whatever was relevant at the time. In the years following, he decided to tweet more strategically, mostly about aspects pertaining to MicroStrategy, although the 2013 Bitcoin doom-and-gloom tweet remains as an example of his early years on Twitter.
Fresh news shows MicroStrategy upping its Bitcoin holdings even further, now holding 38,250 BTC. The company’s stock (MSTR) posted a 9% rally in tandem with the recent Bitcoin purchase.
‘Other Companies Will Follow’ — MSTR Stock Up 9% After Buying Bitcoin
MicroStrategy stock price jumped once again after announcing it has bought a total of $425 million in Bitcoin to date, but will other companies follow in their footsteps?
The Nasdaq-listed firm MicroStrategy (MSTR) is continuing to purchase hundreds of millions of dollars worth of Bitcoin (BTC), resulting in its company stock price to gain over 9% on Sep 16.
MSTR Stock Recovers To Pre-Covid Levels After Buying Bitcoin
MicroStrategy first announced the firm is purchasing Bitcoin on Aug. 11, after which its stock price surged by over 10%.
Now, MSTR price has once again risen in a similar fashion after confirming yesterday that it doubled down on adopting a “Bitcoin standard,” buying over 38,000 BTC worth $425 million at an average price of $11,111.
“We just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting,” CEO Michael Saylor told Coindesk.
“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”
Datavetaren, a pseudonymous software engineer, said other companies will follow MicroStrategy. He wrote:
“MicroStrategy is adopting a #bitcoin standard. Other companies will follow. Finally, central banks will follow (Switzerland likely to be the first.) A new gold standard for the digital age. A neutral store-of-value will create more check and balances for governments.”
What are the risks of MicroStrategy’s Bitcoin accumulation strategy?
According to Joe Weisenthal, the host of “What’d You Miss?” on Bloomberg, the revenue of MicroStrategy steadily declined since 2013.
The company needed new ways to vamp up and gaining exposure to Bitcoin and making BTC its primary treasury asset is quickly becoming one of its major strategies.
Typically, safe-haven assets like gold and real estate are perceived as a hedge against inflation. They are like insurance rather than investment, providing balance to the portfolio.
Bitcoin has the potential to achieve both; it could act as a hedge against inflation and potentially outperform many asset classes over time.
Barry Silbert, the CEO of Grayscale, said the purchase might become the worst or the smartest CEO decision of all time.
There is an enormous amount of risk MicroStrategy is taking to secure such a large holding of BTC. But if BTC explosively grows over the long term, it could be a significant catalyst for the stock. Silbert said:
“This will go down in history as one of the smartest or worst CEO decisions of all time. Case studies and books will be written about it. Either way, it took enormous guts for a public company CEO and I commend him for the courage.”
Don’t Celebrate MSTR Stock Like An ETF
One problematic sentiment around MSTR stock is that some celebrate it as a loophole for an exchange-traded fund (ETF).
While the company has a large exposure to Bitcoin, Compound Finance’s general counsel Jake Chervinskey said such a loophole is non-existent. He also noted that if the firm continues to buy more BTC, the U.S. Securities and Exchange Commission (SEC) could begin inquiring about it. He said:
“No, there isn’t a loophole in the federal securities laws allowing a publicly traded company to convert itself into a bitcoin ETF without SEC approval. The more bitcoin $MSTR buys, the more likely the SEC is to start asking questions that @Nasdaq doesn’t want to answer.”
MicroStrategy CEO Says ‘Bitcoin Scales Just Fine As Store Of Value’
Arguably the biggest Bitcoin adoption move of 2020 turned 78,338 off-chain transactions into just 18 on-chain ones, with MicroStrategy praising scalability.
Bitcoin (BTC) as a store of value “scales just fine,” the CEO of the company that just purchased 38,250 BTC has said.
In a tweet on Sep. 17, Michael Saylor revealed more information about MicroStrategy’s dramatic launch into Bitcoin.
Saylor Praises Bitcoin As A Scalable Store Of Value
Continually making the headlines since its first buy in August, MicroStrategy has now swapped over $400 million of spare capital from USD to BTC.
An interview between Saylor and Morgan Creek Digital co-founder, Anthony Pompliano this week underscored his commitment, having previously been highly skeptical of Bitcoin.
Now, his belief in the technical fundamentals of the network — and its future — is certain. The problem of scaling to meet demand, for example, is a non-issue for Saylor thanks to off-chain transactions.
MicroStrategy’s initial buy-in — 21,454 BTC for $250 million — was a case in point.
“We acquired 21,454 BTC via 78,388 off-chain transactions, then secured it in cold storage with 18 on-chain transactions,” he wrote.
“#Bitcoin scales just fine as a store of value.”
Woo: 2021 May Be The Year Of Microstrategy Bitcoin Trailblazers
Continuing, Saylor described a status quo where on-chain transactions for major investors will remain a rarity:
“If #Bitcoin is treated as a treasury reserve asset, based on our model, 99.98% of all transactions will be off-chain, and assets-at-risk will be in cold storage 99.92% of the time.”
Off-chain transactions via solutions such as the Lightning Network allow Bitcoin transaction volume to increase without adding volume to the blockchain and raising fees to appeal to miners.
In his popular book, The Bitcoin Standard, Saifedean Ammous likewise argues that off-chain activity will become the norm once Bitcoin gains a much larger user base.
That could happen sooner rather than later. Following the Pompliano interview, statistician Willy Woo picked up on Saylor highlighting the world’s 35,000 publicly traded companies that have spare cash reserves of $5 trillion.
“I make out if others follow MicroStrategy’s lead and even just 1% of that capital finds its way into BTC, that’s enough to blow Bitcoin cap to $2T,” he tweeted.
Woo added that given MicroStrategy took six months to approve its shift to Bitcoin, any copycat moves would begin to surface in 2021.
MicroStrategy CEO Seems To Embrace Bitcoin Maximalism
From skeptic to maximalist in seven years.
MicroStrategy’s decision to use Bitcoin as its primary reserve currency has Michael Saylor seemingly favoring the asset over altcoins.
In a Sept. 20 tweet, the business intelligence company’s CEO stated that he considers Bitcoin (BTC) to be a crypto asset network, unlike tokens like Ethereum (ETH) or stablecoins, which he referred to as “crypto-application networks.”
Posting a chart from analytics site Bitcoin Dominance, the CEO claimed that the coin’s dominance “has advanced from a low of 71.05% on December 20, 2017 to 93.57% today.”
When considering network dominance in the crypto industry, I find it clarifying to separate crypto-asset networks like #Bitcoin from crypto-application networks like Ethereum & stablecoins. Bitcoin dominance has advanced from a low of 71.05% on December 20, 2017 to 93.57% today. pic.twitter.com/03cbWVyoLY
However, Saylor is intentionally selective when it comes to this data. Bitcoin Dominance’s figures do not include initial coin offerings or stablecoins, but rather “only includes coins using proof-of-work that are attempting to be money.”
According to CoinMarketCap, which takes stablecoins like Tether (USDT) into account, Bitcoin’s dominance was at a yearly low of 56.67% as of Sept. 13, while Messari shows the metric closer to 59%. Both are far from the 93% dominance Saylor tweeted. Ethereum and DeFi have been driving alt season this year, as the 10 largest DeFi tokens now represent a market cap of roughly $9 billion compared to Bitcoin’s $200 billion.
Though initially claiming “Bitcoin’s days are numbered” in 2013, Saylor has turned bullish on the crypto asset in recent weeks following MicroStrategy’s purchase of $250 million worth of BTC as a reserve currency in August. He announced on Sept. 14 that the firm subsequently bought an additional $175 million of BTC.
“Bitcoin scales just fine as a store of value.”
Saylor isn’t alone in the crypto community in discounting the vast majority of altcoins. Emin Gün Sirer, the creator of the first proof-of-work-based crypto, said in April that Bitcoin maximalists are correct to label “95% of the things out there as scams.”
“They’ve just recycled something that belongs to someone else,” he said.
The MicroStrategy Effect? This Firm Is Helping Businesses Save In Bitcoin
The COVID-19 pandemic and its accompanying monetary policy have caused a surge in demand for bitcoin, and now companies are eying “digital gold” to protect their treasuries from cash depreciation.
Announced Monday, bitcoin financial services firm Unchained Capital has released an “advanced business account” specifically targeting firms that not only want to hold bitcoin but want to handle their own private keys rather than rely on some third-party crypto custodian (in keeping with the ethos of “not your keys, not your bitcoin”).
The impetus to launch this service is straightforward and simple: It is no longer just folks in the crypto sphere who are worried about the printing of money, negative interest rates and the like. Just look at MicroStrategy’s recent moves.
Michael Saylor, founder of the business intelligence company, described bitcoin as “superior to cash” and announced that his publicly traded firm had purchased an additional $175 million of it last week, upping MicroStrategy’s total BTC holdings to around $425 million.
MicroStrategy is blazing a trail that many others are now in line to follow, explained Parker Lewis, head of business development at Unchained Capital.
As well as crypto-native businesses, family offices and investment firms, there is also an emergent crop of interested businesses that are not Bitcoin-centric, Lewis said.
“We have companies that you wouldn’t expect, like your local bakery or your local liquor store that hold bitcoin in treasury,” Lewis told CoinDesk. “They are not Bitcoin-centric businesses, but they hold bitcoin and they hold their own keys; both small and large, like the MicroStrategies of this world.”
As for Saylor, he told CoinDesk the numbers tell the tale.
“This year, the real yield on treasury assets dived to something like -20%. We can expect these assets to yield -10% or less for the years to come,” he said via Twitter DMs. “Corporate treasurers need to keep a reasonably liquid, elastic asset on the balance sheet to ensure the company can meet its obligations to employees, customers, vendors, creditors, etc. Bitcoin is the only asset that meets those requirements that also has a positive real yield.”
In times past it would have been hard to imagine the CEO or chief financial officer of a company wanting to mess around with private keys.
“We make it really simple,” said Phil Geiger, Unchained’s head of marketing. “We hold one key, our clients hold two keys, which means that our clients are really in full control over their bitcoin. With these new business accounts, we have built out a combination of enterprise-level controls for different user types, accounting and so on. But at the base of everything, it’s the Bitcoin protocol.”
This is all fine and dandy, but regulated financial firms see a gray area at best when it comes to crypto custody, and are likely to lean towards the closest thing to the traditional world, a regulated custodian such as BitGo Trust.
“At first blush, that’s entirely logical,” said Lewis. “But I think there will be this push and pull in terms of the way things were, and how they are shifting over to the way things will be. We have this new form of money; do we need to forfeit it to legacy regulation that has existed for 30 or 40 years? Maybe the reality is that the regulations need to change to deliver the best security.”
So if a CFO needs to quickly get their hands on fiat how does that typically work?
“I think this can be tailored to the size of the organization,” said Lewis. “We have relationships with five or six OTC desks as well as being able to trade on exchange.”
Aleksandar Svetski, co-founder of bitcoin savings app Amber, has held 50% of the firm’s treasury in bitcoin for the past year. He pointed to abject conditions around cash and interest rates as a compelling incentive.
“Look at things like negative interest rates,” said Svetski. “What the fuck kind of ‘Twilight Zone’ world do we live in where you now have to pay a bank to hold your money? Of course people are looking for a non-cash alternative. Anyone who isn’t thinking about holding bitcoin now is crazy.”
Now a total of six public companies, MicroStrategy (1st and 2nd), Riot Blockchain, Cypherpunk Holdings, and Grayscale Bitcoin Trust hold Bitcoin in their Treasuries.
What Are YOU Waiting On?
Companies have started to expand their USD-denominated balance sheet and jump into BTC.
Today, there is a lot of green in the crypto market.
In the past 24 hours, nearly $15 billion has been added to the overall crypto market cap.
And all of this has been because of a nice pop up in Bitcoin. Yesterday, the price of BTC jumped to nearly $11,000 and today it surpassed it.
This 5.6% jump in BTC price has been the result of Jack Dorsey’s payments company Square making a $50 million investment in Bitcoin, which represents 1% of its assets.
“Given the rapid evolution of cryptocurrency and unprecedented uncertainty from a macroeconomic and currency regime perspective, we believe now is the right time for us to expand our largely USD-denominated balance sheet and make a meaningful investment in bitcoin,” noted Square in its Bitcoin investment whitepaper.
These 4,709 BTC were purchased over-the-counter over a predetermined 24-hours period to maintain transaction privacy and price slippage. These BTC are stored in its “Subzero”, the open-source Hardware Security Module-backed solution.
The community is super stoked about this, seeing it as a big development that would bring others into the market.
“A big deal,” commented Galaxy’s Mike Novogratz. “It’s not the first guy dancing. It’s the second guy. This is now a movement. Corp balance sheets.”
Novogratz also revealed that Galaxy also “has a lot of BTC on our balance sheet.”
With this, now a total of six public companies viz. MicroStrategy (1st and 2nd), Riot Blockchain, Cypherpunk Holdings, and Grayscale Bitcoin Trust hold Bitcoin in their Treasuries.
Amidst this market euphoria, other companies also revealed that they have also invested in Bitcoin.
eToro CEO divulged that they had BTC in their treasury since 2011 and are “still Hodling.”
Jesse Powell, the founder, and CEO of crypto exchange Kraken, also admitted to it in a roundabout way as he answered a crypto enthusiast asking about when his company would make it to this list.
“You think Kraken hasn’t been accumulating bitcoin over the last 9 years?” Powell said.
While corporations adding bitcoin to their balance sheet is bullish, it is also “overrated,” according to trader and economist Alex Kruger who said, “The function of a corporate treasury is not to *invest*. Corporate demand for gold as an inflation hedge is minimal. Thus the likelihood of a bitcoin domino effect among corporates is very low.”
But the interesting thing that could happen, if this becomes a trend is “major banks would be forced to have a crypto team on payroll to service corporate clients’ hedging needs,” he added.
Bitcoin Hits $11K As Square Exposes $2.3T Corporate Money Pot
Payments company Square’s announcement that it would put some $50 million, or 1% of its assets, into bitcoin has touched off speculation that more corporations might do the same.
Jack Dorsey, the Twitter CEO who also helms Square, is a longtime bitcoin bull, so it wasn’t a huge surprise his company would put some of its corporate liquidity into the cryptocurrency. He’s following the path of MicroStrategy CEO Michael Saylor, who has invested at least $425 million of the company’s assets in bitcoin.
None other than Changpeng “CZ” Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, tweeted a question: “Who’s going to be the 3rd public company to hold #bitcoin in treasury?” Guesses included Twitter, Tesla, Apple, Warren Buffett’s Berkshire Hathaway, even the burger chain Wendy’s.
“It’s a bit surreal to see gigantic corporate entities now going knee-deep in bitcoin,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote to subscribers on Thursday.
One clever, enterprising soul even ginned up a spreadsheet to keep track of the corporate purchases and published it as a new website, bitcointreasuries.org:
Companies in the Standard & Poor’s 500 Index of large U.S. stocks have a combined $2.3 trillion in cash and short-term investments. So a 1% across-the-board allocation to bitcoin would amount to $23 billion of purchases. That’s just over 10% of bitcoin’s total market capitalization, currently about $200 billion.
A big bullish investment thesis for bitcoin is that large institutional investors are on the verge of diving into cryptocurrencies as an asset class, led by money managers like Fidelity Investments that have embraced the new technology and digital-asset markets.
Now it seems like corporate purchases might add to that buying pressure.
Dorsey tweeted out a “white paper” to his 4.7 million followers explaining just how Square had come to buy its bitcoin — noting that the transparency was intended “so others can do the same.”
“To maintain transaction privacy and price slippage on execution, treasury purchased the bitcoin over-the-counter with a bitcoin liquidity provider that we currently use as part of Cash App’s bitcoin trading product,” according to the whitepaper. “We negotiated a spread on top of a public bitcoin index and executed trades using a time-weighted average price (TWAP) over a predetermined 24-hour period with low expected price volatility and high market liquidity, in order to reduce risks associated with cost and pricing.”
Got that, corporate treasurers?
Bitcoin Price Steady As $10B Asset Manager Scoops Up 10,000 BTC
Stone Ridge follows MicroStrategy in going big on BTC as a report puts the indirect cost of Coronavirus at $16 trillion.
Bitcoin (BTC) is winning the battle of the safe havens as another corporate buy-in sees $115 million enter its books.
Asset management giant Stone Ridge confirmed that it made the significant purchase via its spin-off New York Digital Investment Group or NYDIG, which now has over $1 billion in assets under management.
Economist: Fed Must Print $5 Trillion In 2021
“The macro backdrop against the public health backdrop has caused a lot of people to rethink their portfolio composition,” the company’s new CEO, Robert Gutmann, told Forbes on Oct. 13.
Michael Saylor, CEO of MicroStrategy, which purchased $425 million of BTC in August and September, responded:
“As the trillions of dollars on the balance sheets of banks, asset managers, insurance firms, endowments, & family offices begin their migration to the #Bitcoin universe, they will need firms like NYDIG to guide them. $1 billion down, more to go.”
The news comes as a new report warns that the United States Federal Reserve will need to print $5 trillion next year.
Published on Oct. 12, the report by economists Lawrence ‘Larry’ Summers and David Cutler calculates the indirect cost of the Coronavirus to be $16 trillion.
“The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US. For a family of 4, the estimated loss would be nearly $200 000,” it summarizes.
“Approximately half of this amount is the lost income from the COVID-19–induced recession; the remainder is the economic effects of shorter and less healthy life.”
Commenting on the findings, David Rosenberg, chief economist at Rosenberg Research & Associates, concluded that the Fed alone would thus need to print $5 trillion of liquidity in 2021.
This would compound the feeling of unease which began with this year’s mass money printing, which has sent U.S. national debt over $27 trillion.
Rosenberg told Twitter followers to buy gold, but for Max Keiser, there is a clear alternative which makes more sense.
“Gold works, but #Bitcoin is THE FASTEST HORSE IN THE RACE,” he wrote in reply to Rosenberg.
Bitcoin hit highs of $11,690 on Tuesday before returning towards $11,400 at press time, still on monthly gains of 10.5% and year-to-date returns of 60%. As Cointelegraph reported, hopes are increasing that the short term will bring further upside, with even $17,000 coming into play should $12,000 be flipped to support.
From V-shaped to K-shaped
For the fiat economy, however, the picture is looking much bleaker, according to new comments from the International Monetary Fund (IMF).
Speaking to CNBC last week, IMF Managing Director Kristalina Georgieva said that the outlook for many countries was now not a V-shaped recovery but a K-shaped one.
“Most countries are going to be faced with uneven recovery and we see in many cases a ‘K,’ with parts of the economy doing really well, and other parts contracting dramatically,” she forecast.
For Keiser, this was a textbook definition of a phenomenon he calls “neofeudalism.” This involves the concentration of more of the world’s wealth closer to the state at the expense of those further away, creating the modern equivalent of lords and peasants.
“The extreme wealth concentration created by Covid becomes permanent. This would be a new Dark Ages,” he tweeted on Wednesday.
“Bitcoin fixes this.”
Billionaire UK Newspaper Owner Calls DeFi Technology ‘Revolutionary’
UK media boss and former banker Alexander Lebedev has revealed he is looking to launch a decentralized finance powered “bank 2.0.”
Alexander Lebedev, the owner of U.K. newspapers Evening Standard and The Independent, along with Russian publication Novaya Gazeta, has spoken glowingly of the potential for cryptocurrency and smart contracts to revolutionize finance.
In an extensive 1800 word opinion piece published in The Independent on October 13, the billionaire predicted blockchain tech will disrupt what he described as a parasitic global banking oligopoly, asserting that “blockchain technologies and smart contracts will make it unnecessary to employ the vast majority of people in the financial sector.”
Although he thinks the current “explosive growth of DeFi platforms is driven by a rapid influx of liquidity” and “cannot continue indefinitely” he says that nevertheless:
“The technologies embedded in this infrastructure open up tremendous opportunities for rebuilding the global financial system.”
Lebedev said that smart contracts allow customers to access financial services “without the participation of an intermediary in the form of the bank itself,” preventing “greedy bankers” from stealing clients’ funds.
Lebedev also revealed he has invested $100,000 into an Estonia-based yield farming protocol as “an experiment” and seemed surprised at the quick returns. He is now looking to establish an “Independent Decentralized Financial Ecosystem” of his own.
The platform will seek to offer “the full range of services of traditional banks,” including “currency exchange, deposits, lending, settlement and cash services, [and] local and international transfers.”
The former banker noted that global regulators are increasingly warming to crypto assets, citing recent moves to recognize stablecoins and security tokens on the part of German, Chinese, Swiss, and U.S lawmakers.
“The next step will be the ‘digitalization’ of real assets, including production facilities, real estate, goods and services, with their holding in distributed ledgers.”
Part of the reason for his belief in the potential of cryptocurrency is that in its current form, Lebedev asserts that the global financial system is “leading the world economy to disaster.”
Lebedev devoted 25 years to banking and purchased Russia’s third-largest private bank, the National Reserve Bank in 1995. He claims to have observed a shift in contemporary banking practices among his competitors toward “pocketing clients’ money.” Lebedev added that thousands of Russian “banksters” have misappropriated “more than $100 million of their clients’ money” since the 1990s.
He said that “billions of people are completely cut off from banking services” due to their reduced access to financial resources, attributing their economic exclusion to the banking class having nothing to steal from them.
“Perhaps we are on the verge of a real revolution in the international financial system, and the end of the bankster.”
Public Companies Hold Almost $7B In Bitcoin In Heads-Up To Grayscale
Grayscale’s $5.1 billion in Bitcoin under management is fast being challenged by firms including CoinShares and MicroStrategy.
Bitcoin (BTC) holdings at public companies topped $6.8 billion this year as newcomers catch up with industry heavyweight Grayscale.
According to monitoring resource Coin98 Analytics, a total of 13 public companies have now invested in Bitcoin.
Putting Grayscale’s “Sun” In The Shade
Asset management giant Grayscale remains the largest BTC player with 449,596 BTC ($5.14 billion) under its control, followed by CoinShares’ 69,730 BTC ($797 million).
MicroStrategy, the firm which made waves when it announced it had moved to adopt a “Bitcoin Standard,” has 38,250 BTC ($437.1 million). In fourth place is Mike Novogratz’s Galaxy Digital, which controls 16,551 BTC ($189.1 million).
In total, the 13 companies have almost 600,000 BTC ($6.86 billion) locked up, a number which is increasing with Grayscale thus far remaining in the lead.
“Grayscale is the sun,” its confident CEO Barry Silbert commented on Coin98 Analytics’ numbers.
For all Silbert’s publicity activities, however, it is MicroStrategy CEO Michael Saylor who has arguably made the biggest impression in cryptocurrency this year. After the purchase, Saylor began giving regular interviews on Bitcoin’s supremacy over fiat currency and continues to be highly active on social media with the same message.
Replying to a tweet by Silbert on Oct. 12, in which he discussed the Bank of England’s perspective on Bitcoin, Saylor said:
“#Bitcoin is the first digital monetary system capable of storing all the money in the world for every individual, corporation, and government in a fair & equitable manner, without losing any of it. If that’s not intrinsically valuable, what is?”
Bitcoin Shows Clear Dollar Divergence
The past month meanwhile has seen Bitcoin diverge from both U.S. dollar strength and VIX volatility, providing new opportunities for investors keen to diversify.
According to a comparison from Cointelegraph Markets and Digital Assets Data, it is stocks in the form of the S&P 500 and gold which now see increasing correlative patterns with BTC.
This has in turn boosted existing anticipation of a clean divergence away from traditional markets — a “decoupling” for Bitcoin paves the way for significant price gains, analysts argue.
JPMorgan Calls Square’s $50M Bitcoin Investment ‘Strong Vote Of Confidence’ For The Cryptocurrency
Square’s recently announced $50 million investment in bitcoin (BTC) is a “strong vote of confidence for the future of bitcoin” and a signal the payments company sees “a lot of potential” for the cryptocurrency as an asset, JPMorgan analysts said in a report dated Tuesday.
* While Square’s $50 million investment pales next to MicroStrategy’s recent $425 million loading up of the cryptocurrency, JPMorgan’s global market strategists wrote that Square is likely to make more purchases.
* Other payment companies will also likely follow in Square’s footsteps or risk getting shut out of a growing segment, the JPMorgan analysts wrote.
* Millennials have been using Square’s Cash App to buy BTC, the researchers noted, and that demand, along with MicroStrategy’s purchases, indicate Q3’s bitcoin demand exceeded supply at a greater level than Q2’s.
* While noting that options contracts to BTC have risen due to how institutional clients prefer to deal with established exchanges like the CME, the JPMorgan strategists said it’s likely retail traffic is driving the surge in options.
* Square’s investment is a strong vote of confidence for the long term because the September sell-off in BTC only partly alleviated what the JPMorgan team described as overbought conditions created during late July/early August. However, an overhang of net long positions could create a headwind for the price of BTC in the near term, the analysts said.
The Next Big Treasure: Corporations Buy Up Bitcoin As A Treasury Reserve
The entry of firms like Square, MicroStrategy and Stone Ridge may open the BTC floodgates and provide “confidence for the rest to follow.”
October is a time for surprises. On Oct. 8, right on cue, mobile payments giant Square, which boasts a market cap of $86.6 billion, announced that it had invested $50 million in Bitcoin (BTC). Five days later, asset manager Stone Ridge Holdings, which manages over $10 billion in assets, disclosed that it had purchased more than 10,000 BTC, worth around $114 million, as part of its treasury reserve strategy.
They both followed MicroStrategy, a Nasdaq-listed asset manager, which made known last month that it had accumulated $425 million in Bitcoin, making BTC the principal holding in its treasury reserve strategy.
Three publicly owned companies, three big BTC purchases — it may be mere coincidence. On the other hand, the Federal Reserve’s balance sheet has ballooned by $3 trillion since the beginning of 2019, while the U.S. dollar has depreciated 70% against BTC — as Stone Ridge founder Ross Stevens noted in the firm’s Oct. 13 press release.
BTC: The New Reserve Asset?
How do the cognoscenti explain it? The U.S. dollar is falling; bond yields are almost non-existent; and gold is underperforming. Liquidity-flush firms have fewer places to put their cash — so they are turning to cryptocurrency.
“We are seeing a new trend emerge where corporations are using Bitcoin as a reserve asset for part or majority of their treasury,” pronounced Anthony Pompliano in his Oct. 15 newsletter. Saifedean Ammous, economist and author of The Bitcoin Standard: The Decentralized Alternative to Central Banking, told Cointelegraph:
“While I would have expected to see such firms take small positions more as a hedge, it speaks volume to the growing credibility of Bitcoin that as soon as they became intrigued by the value proposition, they chose to go with a large allocation.”
“Scrambling For Alternative Investments”
Edward Moya, a senior market analyst at Oanda — a forex trading company — told Cointelegraph that the COVID-19 pandemic has changed the macro backdrop for fiat currencies, adding:
“The Fed, in particular, has clearly signaled an ultra-accommodative monetary stance will remain in place for a few years, and that is making many institutional investors scramble for alternative investments.”
Gold, the traditional safe haven in crisis times, has disappointed recently, and as a result, “Bitcoin has emerged as a favorite diversification play away from bonds and will likely steadily attract new institutional investors,” said Moya. Ammous further added:
“There is the short-term concern about devaluation of the dollar in light of the increased amount of government spending and stimulus in response to the corona panic crisis.”
Paul Cappelli, a portfolio manager at Galaxy Fund Management, told Cointelegraph that “a more sophisticated investor base has come to understand its [BTC’s] value as a non-sovereign, fixed supply, deflationary asset.” Meanwhile, Lennard Neo, head of research at Stack Funds, commented to Cointelegraph:
“These firms probably see Bitcoin as a hedge or insurance against current market conditions. […] With these companies entering the markets, it opens the floodgates and establishes some form of confidence for the rest to follow.”
A Longer-Term Worry
But COVID-19 distress may soon abate, or so one fervently hopes. This leaves “the longer-term critical problem faced by many companies with the diminishing yield they can get on their cash reserves by holding them in banks or treasury bonds,” according to Ammous.
In the past, companies could hold their reserves in government bonds and be reasonably sure of outperforming the consumer price index (CPI) — i.e., inflation. But today, “there seems to be a growing segment of companies that no longer reasonably expect that into the future,” said Ammous.
Indeed, buried within Stone Ridge’s announcement was a call to banks and philanthropies to likewise make Bitcoin a principal component of their treasury reserve strategies. To that end, Stone Ridge was offering up the services of its New York Digital Investment Group unit, which holds a license from New York State to convert dollars into crypto and back again, along with core custody, financing, and Anti-Money Laundering and Know Your Customer capabilities.
Moya cautioned that BTC remains a risky asset, though that could soon change: “Both Europe and America are struggling with the coronavirus, and investors are widely expecting governments and central banks to continue providing massive amounts of stimulus into the economy. BTC for now remains a risky asset and primarily increases in value when risk appetite is strong.
Eventually, once the dollar resumes a steady downward trend, Bitcoin and other cryptos will attract some safe-haven flows alongside gold.”
Will Square Lead The Way?
Apart from what may or not happen with corporate treasuries, the Square Inc. investment could have reverberations. A $50-million investment in BTC may seem modest for a firm whose market capitalization now surpasses Goldman Sachs’, but most analysts expect that crypto investment will grow.
Square has been bullish on Bitcoin for some years now. Its Cash App service enables users to buy and sell Bitcoin, and some analysts believe other payment firms will now have to facilitate crypto investment in some form — or risk being left behind. It hasn’t escaped notice, either, that the younger generation, the Millennials, are especially keen on cryptocurrencies such as Bitcoin.
But apart from payment firms, could institutional investors and/or Fortune 500 companies follow Square’s lead as well? “Yes. This trend has moved from an ‘if’ scenario to a ‘when’ scenario,” according to Cappelli. Institutional investors, too, will have to find new ways to diversify their portfolios and maximize balance sheet returns. Meanwhile, BTC has risen 50% since the beginning of the year.
But only 18.4 million BTC are now in circulation, and supply could be a problem. “With only roughly 2.5 million Bitcoin left to be mined, many institutional investors will look at other cryptocurrencies for better upside potential,” added Moya.
Ease of access and options that meet diligence and compliance standards are also critical, said Cappelli, adding: “Institutions mainly want their digital asset investments to look and feel like other more traditional investments in their portfolio with everything from service providers to reporting.”
It’s helped that over the past three years, many traditional players have entered the space “like Fidelity, NYSE, Bloomberg, the CME, Deloitte, KPMG, etc. They’ve all expanded their offerings to include digital assets and this trend is growing,” Cappelli told Cointelegraph.
This transformation won’t fail for lack of infrastructure, added Neo, who applauded the institutional-grade platforms that have been built by Fidelity and others. “We view education and regulations as among the most significant barriers” that large firms must overcome if they are to adopt crypto into their core businesses.
What Is A Significant Investment Size?
What could be considered a significant crypto investment for a large hedge fund or institutional investor? “Given the volatility and where the asset class stands today, we have consistently recommended a 50 BP (basis point)-to-2% allocation for suitable investors,” answered Cappelli. As Bitcoin and the overall asset class matures, that allocation could grow further.
Moya told Cointelegraph that hedge funds and institutional investors will be more likely to have around 1% exposure to cryptocurrencies. Publicly held corporations, for their part, “will be more interested in creating their own cryptocurrencies, but the regulatory battle that hit Facebook’s Libra project has demotivated many companies.” He added: “Eventually, a large company will take a decent-sized investment, and that should be enough to force other firms to follow suit.”
A strictly limited supply
Reflecting on the recent public-firm announcements, Ammous told Cointelegraph: “What was most interesting for me about the MicroStrategy and Stone Ridge purchases is that these are not companies that deal with Bitcoin as part of their core business, and yet they chose to place the majority of their corporate reserves in Bitcoin, not just a small fraction.”
“We believe that Bitcoin has the potential to be a more ubiquitous currency in the future,” said Square’s chief financial officer, Amrita Ahuja. “As it grows in adoption, we intend to learn and participate in a disciplined way.”
It was Satoshi Nakomoto’s vision that in times of crisis, governments would never resist the temptation to print more money — even at the risk of debasing their currency — so Bitcoin’s founder wrote into the cryptocurrency’s code a 21-million BTC limit.
No more than that could ever be minted, and that appears to have served Bitcoin well in the time of COVID-19. As Ammous told Cointelegraph, “There seems to be a growing recognition that the strictly limited supply of Bitcoin gives it a good chance at maintaining its value well into the future.”
‘Garbage’ Market Data Is Holding Bitcoin Back: MicroStrategy CEO
MicroStrategy CEO Michael Saylor strongly criticized widely distributed bitcoin markets data as “garbage” and said it severely misrepresents of his own experience with the market’s real liquidity after investing in bitcoin.
In a live interview Tuesday with Hedgeye CEO Keith McCullough, Saylor said bitcoin volume is being reported at a wildly inflated $24.76 billion, referencing the current volume on Apple’s Stocks application. That number is similar to 24-hour bitcoin volume of $20.3 billion reported by CoinGecko.
This data “ships to a billion devices in the world,” Saylor noted, referring to Apple. “It’s garbage.”
“I know for a fact you can’t buy more than $35 million a day without people knowing, so there’s no freaking way there’s $24 billion trading,” Saylor explained, adding that he thinks bad data is “holding back bitcoin.” “It’s just awful.”
Estimates of what volume is “real” are “still all over the map,” said Galen Moore, senior analyst at CoinDesk Research. In January, Moore wrote that, for many cryptocurrency market participants, “data is a marketing tool instead of a revenue source,” and some exchanges are “exaggerating volumes in order to enhance their perceived liquidity.”
In a March 2019 report to the Securities and Exchange Commission (SEC), San Francisco-based Bitwise Asset Management found that approximately 95% of volume reported on popular cryptocurrency data aggregation websites is fake.
“Where can you find something so incredibly compelling that has such bad data around it relative to other assets?” Saylor asked rhetorically.
On a positive note, Saylor said he “love[s] the fact that the data is a little immature” since it represents “the pain and the work of being first or being early.”
Referring to high-quality markets data, Saylor said simply, “The market needs it.”
UK-Listed Firm Mode Putting Up to 10% of Cash Reserves Into Bitcoin
Mode Global Holdings PLC, a London Stock Exchange-listed company, has announced plans to make a “significant purchase” of bitcoin as part of its treasury investment strategy.
* In a press release on Wednesday, the fintech group said it will convert up to 10% of its cash reserves into the cryptocurrency as part of a long-term strategy to “protect investors’ assets from currency debasement.”
* With interest rates in the U.K. at a record low of 0.1%, Mode said it would also seek to diversify away from low-interest money market instruments to maximize the value of returns from its recent initial public offering.
* “Faced with the challenges of COVID-19 and with U.K. interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of bitcoin has only increased,” said Jonathan Rowland, Mode’s executive chairman.
* “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy,” he added.
* With the news, the company follows MicroStrategy and Jack Dorsey’s Square in deciding to place a portion of their treasury reserves into bitcoin.
* MicroStrategy put $425 million into bitcoin, according to a series of disclosures, while Square invested $50 million.
* Mode said it recognized the potential of bitcoin as “a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status.”
* The firm did not disclose a cash value of the bitcoin allocation.
Michael Saylor Claims The Company Will Hold Bitcoin For ‘100 Years’
Microstrategy CEO Michael Saylor plans to hold his Bitcoin for 100 years, describing it as “the world’s best collateral.”
Microstrategy CEO Michael Saylor said he will hold his company’s Bitcoin (BTC) for 100 years, and has no intention of selling it.
On Aug. 11, the business intelligence firm announced it had purchased 21,454 BTC for $250 million. This investment is now worth more than $278 million, representing an 11% increase in two months, and has purchased more Bitcoin since.
In a new interview with Real Vision CEO Raoul Pal, Saylor said the decision to invest $250 million was informed by a discussion between its board of directors and the firm’s investors, auditor and executives. Saylor explained:
“This is not a speculation, nor a hedge. It is a deliberate corporate strategy to adopt the Bitcoin Standard.”
Microstrategy decided to restructure its treasury in response to recent global economic uncertainty, looking to explore assets suited to providing a long-term store of value.
But after considering a variety of options with a 100-year outlook, Saylor decided Bitcoin was the only option. Tax and fees kill almost all other assets, he concluded, and those that aren’t killed are instead crippled because they are controlled by a CEO, government or country.
Bitcoin, on the other hand, is evolving, and over time it gets harder, stronger and faster, Saylor concluded, describing BTC as a “hive of cybernetic hornets protected by a wall of encrypted energy.”
When looking at Ethereum as an alternative to Bitcoin, he told Pal it didn’t compare, as they are “still chasing after functionality.” He explained that “it still has to be proven,” adding:
“There are centralized competitors to it and they’re [Ethereum] not done with the functional architecture yet.”
The fact that Bitcoin is so big, compared with all other cryptocurrencies, is “the market screaming to you there is a winner, […] it’s eating the world.”
Saylor asserted Bitcoin is the world’s best collateral and doesn’t even compare to gold or any other commodities. He told Pal that if you hold $100 million in cash over 100 years, you will lose 99% of it, and if held in gold, you will still lose 85% at best.
Saylor described Bitcoin as performing similar monetary utilities as gold, only better and without the fear of dilution — likening BTC to gold as what steel is to bricks:
“Bitcoin, if it’s not a hundred times better than gold, it is a million times better than gold, and there is nothing close to it.”
With Bitcoin, Saylor argued, “anybody can inspect the fact that I own the Bitcoin in one second,” and yet it can be “sent anywhere in the world for $5.” He added that he could liquidate $100 million BTC on “a Saturday afternoon.”
Saylor told Pal that many people believe he has weak hands, saying “Ya, Saylor’s going to buy it and he’s going to dump it. He’s going to buy it and then buy another company with it. He’s going to buy it until he gets this profit and do whatever.” But in reality, he isn’t going to sell it, explaining that he is in it for the long haul:
“They don’t understand the mindset of long. I’m buying it for the dude that’s going to work for the dude that’s going to get hired by the guy who takes over my job in 100 years.”
Saylor finished the two-hour-long interview by noting that his executives are closely watching developers in the crypto space:
“My whole board is listening to what you guys are saying.”
Abra CEO’s Portfolio Is 50% Bitcoin As Cash Is ‘Becoming Worthless’
Abra’s CEO purportedly increased his holdings prior to Bitcoin touching new 2020 highs.
The co-founder and CEO of major cryptocurrency company Abra is clearly bullish on Bitcoin (BTC).
In an Oct. 23 tweet, Bill Barhydt, CEO of peer-to-peer payments platform Abra, claimed that he has significantly increased his Bitcoin holdings a few weeks ago. According to the CEO, Bitcoin now accounts for 50% of his total investment portfolio.
Barhydt talked about his holdings on an episode of Money Talks. In an Oct. 23 YouTube live stream, Barhydt reiterated his bullish stance on Bitcoin, claiming that “Bitcoin is the single best investment opportunity in the world right now.”
The executive said that Bitcoin’s scarcity is one of the biggest reasons why the cryptocurrency is the best investment option. “As the minting of new Bitcoin approaches zero in the coming years, its value versus fiat will continue to skyrocket in my opinion,” Barhydt said.
“Cash, or government-printed money also called fiat, is actually becoming worthless, while Bitcoin’s value remains constant. There will never be less fiat printed than is now. Cash is only going to get more and more worthless.”
During the live stream, Barhydt also touched upon stablecoins like Tether (USDT) and USD Coin (USDC) as well as central bank digital currencies, or CBDCs. He argued that the issuance of global CBDCs like the digital yuan does not mean that central banks are going to stop printing money.
“It’s the opposite, this actually makes it easier for them to continue their irresponsible behavior of simply printing money at will,” Barhydt said.
Barhydt is known as one of the most prominent Bitcoin bulls. In early October 2020, Barhydt claimed that he has been bullish on BTC price since 2015. Previously, Barhydt called Bitcoin a store of value comparable to gold.
The CEO’s comments follow Bitcoin hitting new highs this year. On Oct. 22, Bitcoin price recorded its new 2020 high of $13,217 in the aftermath of PayPal enabling cryptocurrency purchases.
Subsequently, famous Wall Street investor and billionaire Paul Tudor Jones praised Bitcoin on CNBC’s Squawk Box morning show, stating that he likes Bitcoin “even more than I did then.” The billionaire investor also claimed that holds a “small single-digit investment” in Bitcoin.
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