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
“Michael_Saylor / MicroStrategy Is Making A Speculative Attack On The Fed/USD Like Soros/Druckenmiller Did Against The BoE/GBP In 1992, Ejecting It From The ERM.”
“Saylor Has Pulled The Pin And Tossed A Grenade Into The Fed’s Boardroom.” Max Keiser
Is MicroStrategy A De Facto Bitcoin ETF?
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).
“Bitcoiners Have Declared War On Central Banks And The Global Central Bank System.” Monty Henry
* 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.
MicroStrategy A Cash-Rich Software Company Mints No-Lose Bitcoin Trade
MicroStrategy Inc.’s bet on Bitcoin is paying off — for its bond holders.
When the enterprise software maker issued convertible debt in December with the intention of using the proceeds to add to its Bitcoin pile, the company opened a backdoor for bond investors to play the crypto craze.
To outsiders, the offering seemed “strange” or “a head-slapping moment.” Mature, cash-flow-generating companies rarely tap this corner of capital markets, especially for the risky purpose of funding Bitcoin purchases. Yet those who bought MicroStrategy’s Bitcoin-linked bonds at issuance are sitting pretty — even though the momentum behind the cryptocurrency’s breathtaking rally has broken.
“This is a classic ‘heads I win, tails we tie’ play,” Dave King, portfolio manager of the $2.6 billion Columbia Convertible Securities Fund, said in an interview. “We win if Bitcoin goes up a lot. And if Bitcoin goes down and stays down, we get our money back.”
What King describes can be applied across the convertible-bond asset class. The securities derive a part of their value from the embedded stock option, which tracks with common shares of the company that sold the debt.
MicroStrategy’s widely broadcast bullish bet on Bitcoin in July 2020, detailing a shift in its cash strategy, tied its shares to crypto. So when the price of Bitcoin doubled, so did MicroStrategy’s shares, pushing the convertible deep into the money.
The initial conversion price was $397.99, a level the common stock zoomed past in early January. It now sits above $587. MicroStrategy reports fourth-quarter earnings after the market close on Thursday.
For the crypto purist, the bond’s paper gains might look paltry. For the bond investor, however, there’s certain level of comfort in a Bitcoin play backed by debt: If they don’t trade out of it or convert the securities to stock, they’ll get paid back when the notes mature, assuming the company remains operational.
King estimates the value of the company’s Bitcoin in the range of $800 million to $1.4 billion, assuming proceeds of the convertible offering were used to fund more buying. The midpoint of that range would imply an estimated Bitcoin stash worth around 22% of its $5 billion market capitalization.
“The founder had become a big bull on Bitcoin and invested its very large cash pile in it,” he said. “Even if Bitcoin goes down 30% to 40%, the company still has enough to pay this bond off easily.”
The upsized $650 million offering had other takers. State Street’s SPDR and BlackRock’s iShares exchange traded funds, First Trust’s actively managed ETF, as well as Westwood Management and Lazard Asset Management funds hold the notes, according to data compiled by Bloomberg. King says he is maintaining his position.
The offering is emblematic of the times, according to Craig Manchuck, a portfolio manager of the $5 billion Osterweis Strategic Income fund, who says the firm passed on the bond.
“It’s a barometer of how speculative markets are now,” he said. “There’s a great fear of missing out, like how teenagers feel when they sit out a party. We are just not in the business of investing in Bitcoin.”
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.
‘Cash Is Trash,’ So Let’s Bet $425 Million On Bitcoin
MicroStrategy could have gotten rid of its excess cash by paying a big dividend or buying back a ton of stock. Instead, the company made a big digital currency bet.
In volatile markets, you can use cash as offense or defense. MicroStrategy Inc., MSTR 3.16% which recently had half-a-billion dollars in cash sitting around, thinks it can do both.
The company could have gotten rid of its excess cash by paying a big dividend or by buying back much of its stock. Instead, MicroStrategy bet half its total assets on bitcoin. So is this a publicly traded company or is it a hedge fund?
This foray into digital currency puts an old paradox of investing in a new light. As the great financial analyst Benjamin Graham observed long ago, the better a company is at producing goods and services, the more likely it is to pile up more cash than it needs to sustain the business. Why keep that surplus cash locked up and idle when investors could put it to better use elsewhere?
Most shareholders and corporate executives weren’t bothered much by excess cash when it yielded 5% or more. Now that yields are near zero, investors need to pay attention: When cash is trash, the pressure to take unprecedented risks with it is likely to rise.
MicroStrategy, based in Tysons Corner, Va., sells technology that enables businesses to analyze internal and external data. With software and services so cheap to produce and provide, the company keeps piling up cash.
MicroStrategy’s revenues have barely grown over the past decade, from $455 million in 2010 to $486 million last year. Yet the company finished 2019 with $566 million in cash and short-term investments, up from $174 million a decade earlier. Even after shelling out $425 million for bitcoin and $61 million for stock buybacks since August, MicroStrategy still has $53 million in cash.
And the shares had been stagnant for years.
MicroStrategy had been one of the hottest stocks in the technology boom of the late 1990s, returning 567% in 1999. The company lost more than 90% the next year amid a Securities and Exchange Commission investigation into its accounting. MicroStrategy restated its financial results and settled administrative reporting charges, without admitting or denying them.
Three managers, including Chief Executive Michael Saylor, also settled civil accounting-fraud charges with the SEC. The executives didn’t admit or deny the charges; Mr. Saylor disgorged more than $8 million and paid a $350,000 penalty. When we spoke this week, Mr. Saylor, who is still CEO, declined to discuss the case.
MicroStrategy never recovered its lost glory. From its initial public offering in June 1998 through the end of 2019, the stock returned an average of 1.4% annually. Over the same period, the S&P 500 gained 7.2% annualized, including dividends.
But 2020 has been a whole new story. In August, when MicroStrategy announced it had invested $250 million in bitcoin, the stock jumped 9% in a day. A month later, the company declared that it would continue to put most of its excess cash into bitcoin. The stock rose 23% in two days.
At their peak on Oct. 23, the company’s shares had doubled in price since their low in early March.
MicroStrategy’s Mr. Saylor says the primary objective of buying bitcoin isn’t to make the stock go up, but to keep the company’s purchasing power from going down.
Thanks to the Federal Reserve’s immense intervention in the economy, the U.S. monetary supply is soaring—by one measure, up more than 20% this year. Mr. Saylor expects that pace to continue at 10% or 15% annually, not just in the U.S. but globally.
“We realized that cash is trash,” he says, “and we needed either to shrink the capital structure or move our cash into something that is going to float on the flood of liquidity and not sink under the flood of liquidity.”
Of course, even as the monetary supply has doubled since late 2008 the Fed has struggled to lift inflation, as officially measured, anywhere close to 2%. While financial assets have soared and some items in the real economy have become more costly, many others have stayed flat or gotten cheaper.
Because the quantity of bitcoin is limited to 21 million, the digital currency can never be “debased,” Mr. Saylor argues, and is therefore bound to hold its value over the long run.
At this week’s price of about $13,500, MicroStrategy’s 38,250 bitcoins were worth more than $515 million, a third of the stock’s total market value. Bitcoin doesn’t only go up, though. In 2018 it bottomed below $3,200, down roughly 80% from a year earlier. (To be fair, five years ago it was about $300.)
I asked if Mr. Saylor was nervous about putting so much of his company’s capital into such an asset.
“What would I be nervous about?” he shot back. “If I had $500 million in cash, that would make me nervous because I think it would go to zero [in purchasing power] over five years. So what’s my choice? I think bitcoin is better than gold as a store of value.”
He added, “It’s not perfect, there’s risk. But I can’t find anything better, and the option of doing nothing is more risky.”
However, MicroStrategy is no longer just a software company. Now it’s a bitcoin bet. Investors who wish to buy bitcoin could always do so themselves with the proceeds of a dividend or share buybacks. The point of buying a stock is to get a stake in a business, not to take a flier on cryptocurrency.
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.
MicroStrategy’s Crypto Holdings May Be Paying Off More Than Its Business
With Bitcoin’s rises past $13,700, the company’s BTC holdings are currently worth more than $525M.
Business intelligence firm MicroStrategy’s Bitcoin investment is paying off in a big way, with an estimated $100 million in profit.
According to data published Oct. 27 by independent crypto researcher Kevin Rooke, MicroStrategy has earned more from its Bitcoin (BTC) investment than it did through its actual business for the last three years, from Q1 2017 to Q2 2020.
Rooke’s data shows that the business intelligence firm’s 38,250 BTC holdings — worth roughly $425 million at the time of purchase in August and September — were valued at more than $525 million during the recent price surge to $13,745. According to the researcher, Microstrategy only earned $78 million in net income from its business operations in the last three and a half years.
“Our recent decision to make Bitcoin our primary treasury reserve asset is the latest example of MicroStrategy’s embrace of virtual technologies,” said CEO Michael Saylor regarding the firm’s most recent quarterly report. “The purchase of $425 million of Bitcoin during the quarter offers the possibility of greater return potential for investors than holding such balances in cash and has increased the overall visibility of MicroStrategy in the market.”
MicroStrategy initially purchased 21,454 BTC in August for $250 million, adopting the cryptocurrency as its primary reserve asset. Following the initial investment, the firm bought an additional 16,796 Bitcoin for $175 million.
Though the company added digital assets to its quarterly financial report for the first time in Q3 2020, it also reported a $14.2 million net loss in income from its business operations. MicroStrategy stated in the future, it would purchase or sell more BTC depending on the Treasury Reserve Policy.
Initially claiming “Bitcoin’s days are numbered” in 2013, Saylor has since turned bullish on the cryptocurrency. In the weeks since MicroStrategy’s initial $425 million investment, he has seemingly embraced a Bitcoin maximalist mindset by calling BTC one of the few “crypto-asset networks.”
Bitcoin Is The Best Treasury Reserve Asset Humanity’s Ever Had
You could easily lose up to 90% of your fiat savings to inflation alone in 100 years, but that would never happen with Bitcoin.
At the time of writing this article, around 3.6% of Bitcoin (BTC) is locked up in long-term holdings by institutional investors.
According to the data, 13 entities have amassed close to 600,000 BTC — about 2.85% of all Bitcoins and worth approximately $6.9 billion.
The list includes MicroStrategy at the top, with close to 38,250 BTC (about $450 million). The second on the list is Galaxy Digital Holdings with 16,651 BTC (about $198 million). The third, with 4,709 BTC, is the payment company Square Inc., founded by Twitter’s CEO Jack Dorsey.
Separately, some companies help their clients invest in BTC. One such company is Grayscale Investments through its GBTC trust, which holds around 450,000 BTC.
With that stated, the amount of Bitcoin that publicly traded companies hold as a reserve is a tiny fraction of the corporate treasuries around the world. Indeed, the actual amount of cash held in reserves is in the trillions of U.S. dollars.
But Consider This: Nine companies in the S&P 500 are sitting on close to $600 billion in cash and short-term investments, and if just 5% (or $30 billion) of that amount is converted into Bitcoin, the price could easily increase fivefold.
Of course, there is the question of where to place Bitcoin in company investment portfolios. The most likely category is “alternative investment.” The need to strike a balance between traditional and alternative investments might reduce the appetite the market might have for the cryptocurrency.
Nevertheless, the potential demand is still huge. As mentioned in a recent report by Fidelity, the alternative investment market grew to $13.4 trillion by the end of 2018, and very little of it was in Bitcoin. It might take converting as little as 5% of that to see the Bitcoin price moon.
Some investment firms have chosen to create entirely separate holding companies for Bitcoin and other crypto assets. For example, Stone Ridge launched New York Digital Investment Group, which today has over $1 billion worth of crypto.
What Drives This Movement?
To understand this phenomenon better, I recently had an enlightening chat with Michael Saylor, the founder of MicroStrategy. In particular, I found his pick of 100 years as the base on which to measure the success or failure of a reserve asset very interesting.
Of course, most companies are founded with the expectation that they are going to be around for quite some time — centuries, preferably. Even for individuals, it still makes sense to look at how investments might change over a hundred years, as a person might amass wealth intended for heirs or even causes that are close to the heart, such as climate change. As Michael Saylor said:
“An excellent way to evaluate any investment is to take $100 million and move it forward a hundred years and ask the question what happens. If I had $100 million worth of currency in any of the largest cities of the world in the year 1900, and I went forward for 100 years, and I put the money into the best bank in the city, I have two types of risks; counterparty risks and inflation risk. Regarding counterparty risk, every major bank in every major city around the world failed in 100 years. And that is a 90% probability you lose everything.”
Of course, the most obvious weakness to spot when considering the performance of any reserve asset in 100 years is inflation. Out of all asset types, fiat currency experiences the most inflation over time. For example, what $5 could buy in the 1920s is far more than what it can in 2020.
According to a website that collects and processes government data for the benefit of the public, the U.S. dollar loses close to 2% of its purchasing power every year.
What About The Other Assets?
While real estate might seem like a great asset to hold as a reserve for the long term, it is susceptible to losing value through things like taxes. More importantly, though, real estate faces risks that come with changes in regulation or public governance.
In the span of 100 years, it is highly likely that a government that respects private property ownership is replaced with one that does not. This has already happened several times around the world in the last century.
Meanwhile, stocks also face risks of poor management and regulation changes. Michael Saylor gave the example of power and water utilities, industries in which highly lucrative companies have become nationalized. We cannot say with conviction that in the next 100 years, internet service providers, for example, aren’t going to be turned into public utilities.
Even gold and other precious metals run into issues when you look at them in terms of 100 years. While they appreciate over time, the logistics of holding them can be stressful. You could use third-party storage services such as commercial banks, but history has taught us that gold can get lost even there, especially during wartime or political upheavals such as revolutions.
This has also happened several times in the last century. During World War II, large masses of gold were stolen by both state and non-state actors. Similarly, during the Soviet revolution, a lot of privately owned gold was seized by the incoming government.
What About Bitcoin?
As for now, Bitcoin has no counterparty risks. In other words, we don’t have to worry that the actions of a third party are going to lead to a significant loss of the asset’s value. It is also protected from risks that might come from regulation or extreme change in government policy. The holders of Bitcoin are always going to be in complete control of it.
As a peer-to-peer network, the Bitcoin platform gives holders of the asset a level of control that bypasses regulation or the use of state force. Meanwhile, we are almost assured that its value will continue growing over the years, as the supply is determined and the emission rate of new units halves every four years.
The autonomy and increasing scarcity of Bitcoin is most likely going to drive its value up over time, and it would come as no surprise in 100 years to see its price considerably higher than where it is today.
Almost 80% of Square’s Cash App Q3 Revenue Was From Bitcoin
Square’s Cash App has increased Q3 Bitcoin revenue by 1,100% after more than $1.6 billion Bitcoin was purchased by users.
Cash App, the Bitcoin-friendly mobile payments app from U.S. financial services firm Square, has reported Bitcoin (BTC) has overtaken all other revenue sources, making up almost 80% of its entire revenue in the third quarter.
In Square’s third-quarter report, Cash App’s Bitcoin-derived revenue of $1.63 billion in Bitcoin marked a massive increase of more than 1,100% when compared to the same period in 2019.
Bitcoin revenue was by far the largest component of Cash App’s overall revenue generation of $2 billion, with all other revenue streams totaling $453 million, or 22% of the total.
Cash App functions as a broker for Bitcoin purchases, buying it on behalf of the user, and adding a small fee.
The report notes that some of the increased Bitcoin sales were due to the app’s Auto-Invest tool, launched in May this year, which allows users to recurring daily or weekly purchases of stock or BTC.
Bitcoin revenue produced $32 million in gross profit for the third quarter, an increase of 15 times from the previous year’s profit of $2.1 million in the same period.
Square’s total Q3 revenue was more than $3 billion, up 140% from 2019 — of which Bitcoin comprised more than 50%. The total Bitcoin revenue for all of 2019 was $338 million with a gross profit of $5 million.
Hours after the report was released, Square’s share price rose 6% during after-hours trading to sit at $184, eyeing off the previous all-time high of $190 earlier this month. At the same time, Bitcoin rose by a similar amount to hit a two-year high of $15,880.
In the report Square also noted its $50 million Bitcoin (4,709 BTC) investment as a treasury asset, which is now worth $74.8 million. The company’s purchase was based on the belief that “cryptocurrencies are an instrument of economic empowerment and align with the company’s purpose,” adding:
“We expect to hold this investment for the long term.”
Despite Square’s large investment, the company ranks seventh in terms of publicly trading company’s Bitcoin holdings.
Crypto Fund’s Unlikely Strategy: Taking On Bitcoin And S&P 500 Returns
A crypto fund is buying up Bitcoin at a major discount in a high-risk, high-return game. What are the odds of outperforming BTC itself?
Bitcoin has been one of the best-performing assets on the planet since its launch in 2009. The digital coin rose nearly 9 million percent in price between 2010 and 2019. Simply holding or averaging into Bitcoin (BTC) positions yields a certain profit benchmark.
Finding an investment or trading strategy that outpaces Bitcoin’s performance can prove difficult, but a financial fund known as Off The Chain Capital has claimed to do just that. The fund has also outpaced the S&P 500, a popular mainstream financial market index, although the S&P stands as a less formidable opponent in terms of price gains.
“It’s easy to outperform the stock market because if you look at Bitcoin relative to other assets like dollars, gold, stocks and bonds, Bitcoin is sucking in all the value out of those,” Brian Estes, the fund’s founder and chief investment officer, told Cointelegraph. Bitcoin naturally provides greater profit than other mainstream financial assets, such as stocks and gold, he explained, adding: “The hard part is to outperform Bitcoin.”
Estes created Off The Chain Capital in 2016 as a financial fund open only to his friends and family. A number of years later, the fund began letting other members of the public invest, Estes explained. “We have over 90 partners now in the fund,” he noted.
“The reason I decided to open up the fund to outside investors was I finally figured out how to outperform Bitcoin.”
CT: Can you explain how the fund works? Such as what is in the fund and what your mindset regarding that is?
BE: What I figured out was that the best way to outperform Bitcoin is to buy Bitcoin below what other people could buy it at or sell Bitcoin above what the spot market is. We found ways to buy Bitcoin at a discount, and we found ways to buy Bitcoin at spot prices and then sell it for above to people who are willing to pay us a premium for Bitcoin — and that’s pretty much all we do in the fund. So, we’re a value investor in Bitcoin and blockchain assets.
CT: When you buy below and sell above, are you talking more about long-term action or are you talking about short plays?
BE: We don’t trade. Our average holding period is over 12 months, so we’re not traders. We don’t use leverage. We’re not leveraging up the portfolio to outperform Bitcoin. We’re using a traditional, Graham-Dodd, Warren Buffett value method to buy Bitcoin for cheap.
* We’re one of the largest buyers in the world of Mt. Gox bankruptcy claims. So, when you buy a Mt. Gox bankruptcy claim from people who have a claim on the company, our average cost is about $1,000 per claim, and we’re getting almost $3,000 worth of assets.
Those assets inside of a claim are 0.1785 Bitcoin, 0.18 Bitcoin Cash and there’s about $784 of just cash, like currency, in there. When you add all that up, there is about $3,000 worth of value. Like I said, our average cost is about $1,000.
These claims will eventually get paid out over the next few years, and when these claims get paid out, even if Bitcoin doesn’t move, we’re almost tripling our money because we’re buying this Bitcoin at a discount through these claims.
Mt. Gox’s Legacy Lives On
Mt. Gox started as one of the earliest Bitcoin exchanges. The marketplace operated from 2010 to 2014, ultimately ending in disaster. The exchange suffered an infamous hack in which nefarious parties reportedly pilfered roughly 850,000 BTC, leading to the exchange’s demise in 2014.
Fast-forward to 2020, and authorities are still sorting through the rubble and aftermath of the affair. Part of the process has seen victims who lost funds from the Mt. Gox ordeal submit claims for compensation for their losses. Entities such as Off The Chain Capital look to buy these claims for profit, albeit in the form of delayed gratification.
Essentially, due to the red tape involved and legal processes around Mt. Gox, these claims do not pay out right away and have suffered many delays. Mt. Gox rehabilitation trustee Nobuaki Kobayashi oversees the ordeal. The payout for the claims has seen a number of delays. Kobayashi must provide the courts with a plan of action. Most recently, the proposal’s due date was moved from Oct. 15 to Dec. 15.
In addition to the Mt. Gox claims, Off The Chain Capital employs other strategies, although the firm does not divulge these tactics to the public, Estes explained. Off The Chain Capital is not the only player interested in this type of financial play, however.
Fortress Investment Group stands as another example of a party that has expressed interest in buying Mt. Gox claims.
Buying Mt. Gox claims helps both sides
Buying these claims also helps the victims of the Mt. Gox ordeal. They can receive compensation for their losses sooner, albeit at a discount, through selling their claims.
CT: So, the Mt. Gox claims: The reason you’re getting the discount is because you are not being paid out until the future, correct?
BE: Exactly, yeah. So, we’re giving people liquidity. They have a claim, so they get liquidity, and they get $1,000 per claim. What we get is value. We get $3,000 of value, but we get the illiquidity. So, these are illiquid investments until the Japanese trustee decides to distribute the Bitcoin, Bitcoin Cash and currency out. When that happens, we become liquid. We’re willing to be illiquid for the return — for a three-times return. That’s a good trade-off for us.
It benefits the people selling the claims too because they’ve been sitting on these claims for almost seven years. Most of the people selling these, they have life events that happened to them. They need the money, so they’re happy to sell them and to have someone to sell them to. They’re getting married, having a baby, buying a new house or they wreck their car, and they need liquidity.
CT: Is there any idea of when the claims will be paid out? Will they all be paid out at once, or are they being paid out every couple of months?
BE: On Oct. 15, the Japanese trustee was supposed to update the distribution plan. They postponed it until Dec. 15, so on Dec. 15, we’ll have more clarity. It’s kind of anyone’s guess. Some people are thinking six months, but we’re planning for about two years, hoping that it’ll be a year or less, but it could be another three to four years. No one really knows.
MicroStrategy CEO Explains Why Bitcoin Is ‘A Million Times Better’ Than ‘Antiquated’ Gold
MicroStrategy’s headline-grabbing bitcoin bet was a rational response to a macroeconomy in chaos, said Chief Executive Michael Saylor.
Appearing Tuesday at CoinDesk’s Bitcoin for Advisors virtual conference, Saylor shed new light on one of this year’s biggest cryptocurrency stories: his software company’s recent purchases of $425 million in bitcoin.
That surprise September move by Nasdaq-listed MicroStrategy marked one of the first – and largest – embraces of bitcoin by a mainstream corporation.
In a prerecorded fireside chat with CoinDesk Chief Content Officer Michael Casey, Saylor unpacked MicroStrategy’s bitcoin thought process, why it decided to eschew cash as a treasury reserve and whether gold can reclaim its spot as the marquee store of value in an increasingly digital world.
Saylor’s short answer: Gold can’t. He thinks bitcoin has seized the lead.
Hoarding gold is “an antiquated approach to storing value,” he said. Bitcoin is “a million times better.”
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In Saylor’s telling, MicroStrategy’s bitcoin journey began with the realization its $500 million cash pile was being eaten alive by government money printers.
With recent emergency stimulus inflating the U.S. money supply faster than a Thanksgiving parade balloon, company executives felt compelled to move the treasury reserves away from the dollar.
“What we’re trying to do is preserve our treasury,” he said. “The purchasing power of the cash is debasing rapidly.”
For the last decade or so, the M2 money supply – the sum of physical cash, checking and savings accounts, certificates of deposit and money market funds – grew a modest 5.5%, Saylor noted. “A rational view of business treasury strategy would be, you had to get more than five and a half percent as your cost of capital in order to hold your purchasing power from 2011 to 2020,” he said.
But when COVID-19 hit this year, tanking the economy, the measures taken to contain the damage swelled M2 by 20%, raising the hurdles for corporate treasurers to preserve that purchasing power. “The cost of capital of every cash treasury or every treasury in the world is now 20%,” Saylor said.
To be sure, U.S. inflation, as measured by the core Consumer Price Index (which excludes food and energy) declined briefly in 2020. But to Saylor, that measure is “irrelevant.”
“If inflation only means a market basket of things with no food and energy in them, then almost by definition I’ve defined a metric which will never go up,” he said.
He pointed to cash holders in inflation-prone countries like Argentina, Brazil and Venezuela. They know all too well their purchasing power takes a hit when money supply expands.
“What if you live in Europe and the United States? It wasn’t obvious. But it needs to become obvious,” Saylor said. “I think people will figure it out.”
Convinced the dollar was no place for MicroStrategy’s excess capital, Saylor said he and his executives began trawling around for a “tangible” asset alternative. “We had to cycle through real estate, bonds, equity, precious metal, derivatives or crypto,” Saylor said.
Of that group, precious metals, particularly gold, has long stood as an enticing store of value, a scarce, safe-haven asset recognized around the world. Not to Saylor. For starters, he balked at the notion that gold is scarce. “Gold is the least abundant of the commodities, but you can still produce gold,” he said.
But he’s also acutely concerned with what he describes as the clashing interests of gold miners and gold bugs. One is trying to capitalize on the market by mining replenishable supply while the other is hoping that access remains scarce, pushing prices up.
“The gold miners are the enemies of the gold holders,” said Saylor. “The gold miners are trying to destroy your value, right?
They’re not trying to help you.”
He predicts an even bigger problem with the gold market: Investors fleeing to bitcoin. Even if they don’t know it yet, Saylor thinks gold investors will eagerly dump the commodity for what he calls a superior store of value. It’s not an if. It’s a when.
“Not a good bet to bet against ingenuity and assume that people will be lazy and ignorant for the next decade, because it’s not likely,” Saylor said.
Citing one analyst’s prediction that Federal Reserve action will keep equities moving upward regardless of the recent election’s outcome, Saylor said the “most aggressive monetary expansion” is probably ahead.
Investors will therefore likely continue treating blue-chip juggernauts from Apple to Amazon as a new kind of safe haven. “They’re desperately grasping at straws,” Saylor said. All those assets are reliant on the fiat currency he sees as crumbling away.
“Equities don’t make a good store of value over the long term, unless the company can raise its prices faster than the rate of monetary expansion, or raise its gross margins faster than the rate of monetary expansion,” he said.
Saylor predicts monopolistic corporations will be the only ones positioned to achieve that kind of price pump. But the politicians won’t let those corporations exercise such power indefinitely, he said. So, back to square one.
“Ultimately you have to find something which you can’t print more of that doesn’t have its fundamental underpinnings tied to a fiat currency, and the only thing that I can find right now is bitcoin,” he said.
Another Mainstream Company SkyBridge Is Seeking Approval To Invest In Crypto
Anthony Scaramucci’s investment firm, SkyBridge, seeks approval from the SEC to invest in crypto.
Investment firm SkyBridge, founded by former Goldman Sachs’ vice president Anthony Scaramucci, is one of the latest companies looking to invest in cryptocurrency.
The company is putting together a hedge fund that includes Bitcoin (BTC) investment, according to a United States Securities and Exchange Commission, or SEC, filing from Friday. The prospectus details:
“The Company may seek to gain investment exposure to certain Investment Funds or Investment Managers which may enter into derivative transactions, such as total return swaps, options and futures. Investments by the Company and/or Investment Funds may also be made in companies providing technologies related to digital assets or other emerging technologies.”
After more than a decade of progress, several mainstream companies and individuals have kicked off a small but notable trend of entrance into crypto investment, particularly Bitcoin. Billionaire Paul Tudor Jones piled into Bitcoin purchases earlier this year. He also recently described how early he feels the investment opportunity still is.
Despite SkyBridge’s interest, it still requires approval from the SEC before moving forward. The prospectus includes:
“Neither the Securities and Exchange Commission (the ‘SEC’), the Commodity Futures Trading Commission (the ‘CFTC’) nor any other U.S. federal or state governmental agency or regulatory authority has approved or disapproved the merits of an investment in these securities or passed upon the accuracy or adequacy of this Prospectus.”
The prospectus included a section describing “digital assets,” in which it briefly explained their uses, risks and other points of consideration. “Digital assets have no intrinsic value other than as a method of exchange and are not based on a tangible commodity, security, contractual right or legal obligation,” the document says.
“The values of digital assets should not be expected to be connected or correlated to traditional economic or market forces, and the value of the investments of Investment Funds in digital assets could decline rapidly, including to zero,” the prospectus says after pointing out the “tremendous price volatility” seen in cryptocurrencies against the norms shown in mainstream investments.
Bitcoin has risen to significant heights in recent weeks and currently sits a mere stone’s throw away from its all-time high.
Corporate Bitcoin Frenzy: Companies Now Hold $15.3 Billion In BTC
Companies now hold over 842,000 BTC, which at the current Bitcoin price of $18,200, is worth $15.3 billion.
As of Nov. 20, companies hold around 842,229 BTC or 4.54% of today’s Bitcoin (BTC) supply, according to the Clark Moody dashboard and data from Bitcointreasuries. This is equivalent to a staggering $15.3 billion at the current price of $18,200.
Public companies and institutional investors are continuously accumulating Bitcoin. The spark that began with MicroStrategy’s ambitious $425 million BTC purchase has led to a broad institutional frenzy around the dominant cryptocurrency.
Why Are Institutions And Companies Acquiring Bitcoin Now?
The demand for Bitcoin from companies and institutions likely comes from its growing reputation as a digital store of value.
Bitcoin is unique in that it can hedge portfolios against inflation, like gold, but has the potential to see exponential growth.
Hedge assets are typically stagnant and demonstrate low volatility over a prolonged period. They are meant to operate as insurance for a diversified portfolio so that when the market dips, the portfolio is protected.
Bitcoin achieves both: it is able to operate as a hedge asset and also expose investors to large growth potential in the long term.
As such, Michael Saylor, the CEO of MicroStrategy, said Bitcoin should not be considered as a payment network nor a currency.
BTC is highly compelling as a store of value, which also does not put it in the crossfire of regulators. Referring to the interview of the United States Securities and Exchange Commission chairman Jay Clayton saying BTC is not a security, Saylor said:
“This is why Bitcoin should be neither a currency, nor a payment network. The principles of humility and harmony dictate that we should allow technology partners to provide for payments, and defer to governments on matters of currency. BTC is a purely engineered Store of Value.”
As long as the perception of Bitcoin from institutions and corporations as an established store of value remains, the demand for BTC would likely remain high.
Savings Technology “Orange Pill” For Companies
Corporations are now holding roughly 4.5% of today’s Bitcoin supply, which is around 18.5 million BTC. This percentage is relatively high considering that BTC has a total fixed supply of 21 million.
When lost or dormant coins are considered, the total supply is estimated to be around 17 million in total.
Companies acquiring Bitcoin as a treasury asset, like MicroStrategy, is particularly optimistic because it shows they are not expecting short-term returns.
Hence, when corporations hold BTC with a low time-preference, it would also result in lower selling pressure over time by decreasing the available supply.
For instance, on Aug. 11, when MicroStrategy announced its initial purchase of $250 million worth of Bitcoin, Saylor said:
“MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
The prospect of inflation and consistent liquidity injections from central banks further fuel the medium- to long-term outlook for Bitcoin, which some analysts consider the perfect environment for BTC to shine over time.
Meanwhile, to offset the negative economic impact the pandemic has had on the financial market, regulators are continuing to create relaxed financial conditions. For stores of value, like gold and Bitcoin, such a trend is beneficial heading into 2021.
MicroStrategy Wants To Be In The Bitcoin Business, Not Just An Investor
MicroStrategy executives are on the hunt for blockchain experts who could help the publicly traded firm build a suite of bitcoin data services.
Exactly what those services might be, when they would come online and how they would be monetized are still open questions. But in a Nov. 16 conference call, Chief Executive Michael Saylor, who spearheaded MicroStrategy’s nine-figure bitcoin allocations this summer, told investors his firm is eager to “leverage” its business intelligence experience in the bitcoin data space.
“There’s an entire exploding universe of intelligence opportunities all wrapped around this kind of unique bitcoin intelligence coming off the blockchain,” he said. “And we’ll explore it all.”
As first reported by The Block, the comments mark a potential expansion by one of the single largest participants in bitcoin’s current bull run: from pure bitcoin investor (and node runner) to a firm also in the business of bitcoin.
To be sure, “we don’t have any one thing that we’re sure makes sense to commercialize yet,” Saylor told investors.
But the company is putting feelers out for new hires nonetheless.
“We’re actively looking to source and recruit some talented folk that have expertise in blockchain that would like to join us on this journey,” said Chief Technology Officer Tim Lang.
Cypherpunk Holdings Becomes 9Th Largest Public Holder Of Bitcoin
Canadian holding company dumped XMR and ETH to fund its acquisition.
Cypherpunk Holdings (CSE:HODL), a privacy-focused Canadian investment company, has upped its stake in Bitcoin (BTC).
The company disclosed Thursday that it has added 72.979 BTC to its reserves since June 30, 2020.
Cypherpunk funded the acquisition by liquidating its holdings of Monero (XMR) and Ethereum (ETH), as well as through partial proceeds from a private placement of $505,000 CAD, or $388,000 U.S., closed on Aug. 27.
With the purchase, Cypherpunk now has 276.479 BTC in its reserves, making it the ninth-largest public Bitcoin holder. At current values, Cypherpunk’s stake in BTC is worth just under $4.8 million.
At the time of writing, at least 14 publicly-traded companies held Bitcoin on their books. Combined, their holdings amount to 66,896.59 BTC, or $1.2 billion. That’s equivalent to roughly 3.2% of Bitcoin’s circulating supply.
Cypherpunk Holdings, which trades on the Canadian Securities Exchange, has several privacy-focused businesses on its books, including Wasabi Wallet and Samourai Wallet. The company also invests in Hydro66, a green cloud infrastructure platform, and smart contract protocol Chia Network.
The company is run by Antanas Guoga, or Tony G, a Lithuanian businessman, politician and former professional poker player.
He now serves as an elected member of the Seimas, the legislative branch of the Lithuanian government. Previously, he served as Member of European Parliament for Lithuania.
It appears that more public companies are converting their cash holdings into Bitcoin as a more suitable store of value. MicroStrategy, which has converted most of its cash holdings into Bitcoin, is the most prominent example of this trend. The company now sits on 38,250 BTC after nearly doubling its holdings over the summer.
Galaxy Digital is the second-largest public Bitcoin holder at 16,402 BTC, followed by Square’s 4,709 BTC.
Guggenheim Fund ($295 Billion Assets Under Management) Reserves Right To Put Up To 10% In Bitcoin Trust!
The $275 billion company has filed an SEC amendment to allocate over $500 million from the Macro Opportunities fund to Grayscale’s GBTC.
An SEC filing on Friday indicates that the next Wall Street institution to take a public position in Bitcoin may also be among the largest yet: the $275 billion financial services firm Guggenheim Partners.
The Guggenheim filing allows the Macro Opportunities fund to purchase GBTC, a publicly-traded Bitcoin investment vehicle from Grayscale, at an indeterminate point in the future.
“The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”),” the filing reads.
According to independent ratings firm Morningstar, the Guggenheim Macro Opportunities fund currently has $5.3 billion in assets under management and sports a four-star rating “based on risk-adjusted returns out of 270 Nontraditional Bond funds.”
Guggenheim describes the overall fund strategy for the institutional-grade shares (ticker: GIOIX) as a product of the investment team’s “highest-conviction ideas.” If the fund were to take the full 10% stake in GBTC, it would be worth north of $500 million.
The filing also notes a long list of potential investor risks associated with cryptocurrencies, which it refers to as “digital assets designed to act as a medium of exchange.” Risks include lack of cryptocurrency exchange regulation, GBTC’s historical “significant premium” to net asset value, and uncertainty regarding tax laws and regulations, among others.
This preparatory move by Guggenheim appears to be part of a cascading series of investments indicating increased acceptance of Bitcoin among major financial institutions. In August, business intelligence firm Microstrategy purchased nearly 40,000 Bitcoin, leading to a parabolic move in share price. Likewise, financial services firm Square, Inc bought $50 million in Bitcoin in October.
2016: The institutions are coming! 2017: The institutions are coming! 2018: The institutions are coming! 2019: The institutions are coming! 2020: The institutions are here! 2021: Dammit, the institutions bought all the #Bitcoin
Guggenheim CIO Says Bitcoin ‘Should Be Worth’ $400,000
Guggenheim Partners Chief Investment Officer Scott Minerd shocked Bloomberg TV hosts Wednesday afternoon when he said his firm’s fundamental analysis shows bitcoin should be worth $400,000.
* “Our fundamental work shows that bitcoin (BTC, +13.95%) should be worth around $400,000,” said Minerd. “Whoa!” responded one of the hosts.
* That sky-high price target is based on two things, according to Minerd: the asset’s scarcity and its relative value to gold as a percentage of gross domestic product.
* “Bitcoin has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions,” Minerd told Bloomberg TV.
* Guggenheim made the decision to start allocating to bitcoin when the leading cryptocurrency was trading around $10,000, Minerd said.
* Minerd said allocating to bitcoin, given its current price above $20,000, is “a little more challenging.”
* Guggenheim Partners manages more than $230 billion worth of assets.
Coinbase Executed MicroStrategy’s $425M Bitcoin Purchase In September 2020
One of the largest Bitcoin purchases in 2020 took more than five days to complete.
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.”
Here’s Why Bitcoin Is Like ‘Lebron James,’ According To Microstrategy CEO
MicroStrategy CEO Michael Saylor draws a comparison between Bitcoin and NBA star Lebron James.
In an interview with economist Marc Friedrich, MicroStrategy CEO Michael Saylor said that Bitcoin is not the same as it was in 2015 or 2017. According to Saylor, the arguments against Bitcoin (BTC) that were relevant four years ago are no longer applicable.
How Is Bitcoin Like Lebron?
Bitcoin has grown exponentially since the 2017 peak in terms of infrastructure, fundamentals and adoption. In the past year, institutions have started to increasingly see BTC as a store of value and an inflation hedge.
In 2017, critics said Bitcoin was too volatile and that there was a risk it could drop to zero because it was an asset in a nascent phase. Saylor emphasized that these arguments are less relevant now because BTC has evolved significantly in three years.
Saylor Emphasized That Lebron James Played Basketball From Ages 8 To 18, But He Matured To Evolve Into One Of The All-Time Greats. He Said Bitcoin Went Through A Similar Period, Stating:
“I also thought it was important to address head on the fears and anxieties of the original Bitcoin and the crypto community that have all these tropes, like ‘oh it’s risky, it’s volatile, might go to zero,’ and they are still living in the 2012, 2015, and 2017 timeframe. And what I want to say to them is Lebron James played basketball from age 9 to 18, and he was talented but irratic and volatile. But then he grew up and from age 18 to 28, he destroyed everybody and everything in his way.”
One of the major changes Bitcoin has seen since 2017 is its market structure. Three years ago, retail platforms like BitMEX were the dominant players in the derivatives market.
As Cointelegraph reported, institutional platforms such as the Chicago Mercantile Exchange (CME) have consistently processed volumes similar to leading retail-focused exchanges. As of Dec. 4, the CME BTC futures market has an open interest of $1.14 billion, which is higher than Binance Futures, Bybit, Huobi and BitMEX.
On-chain data also show a considerable increase in institutional growth based on large transactions on the Bitcoin blockchain.
Large BTC Transactions Doubled This Year
According to data from IntoTheBlock, the number of transactions valued at above $100,000 has increased twofold over the past year. This is indicative of the increase in institutional activity on the Bitcoin blockchain, the analysts said.
Considering the noticeable change in volume trends and on-chain data in the past 12 months, the analysts wrote that Bitcoin is seeing high institutional growth. They wrote:
“The number of transactions of over $100,000 recorded on the Bitcoin blockchain on a daily basis has more than doubled from a year earlier. Furthermore, the total volume transferred in these has experienced even larger growth with 6x over the same period.”
Based on a variety of factors, including the fact that there is significant institutional involvement in the Bitcoin market, investors like Saylor remain confident that BTC is evolving into an established store of value and that this is improving its perception with mainstream investors.
MicroStrategy Will Issue $400 Million In Securities To Buy More Bitcoin
Leading business intelligence firm MicroStrategy is doubling-down on Bitcoin, announcing a securities offering to raise $400 million to invest in BTC.
The world’s largest publicly traded business intelligence firm, MicroStrategy has announced plans to invest the proceeds from a $400 million securities offering into Bitcoin.
On Dec. 7, the firm revealed plans to issue $400 million in convertible senior notes — a debt security that can be converted into the issuing company’s shares. The announcement stated:
“Microstrategy intends to invest the net proceeds from the sale of the notes in Bitcoin.”
At current prices, the $400 million would increase the company’s holdings by 20,833, which would bring the firm’s total crypto stash to almost 62,000 BTC.
Microstrategy will pay semi-annual interest to the note-holders until December 2025. The firm also reserves the right to redeem the notes for cash from Dec. 20, 2023.
The announcement states that MicroStrategy may also offer up to an additional $60 million worth of notes to its initial purchasers within 13 days of commencing the offering.
The securities will be issued under Rule 144 of the Securities Act, and will be available to qualified institutional investors only.
In response to MicroStrategy’s announcement, Gabor Gurbacs, the CEO of New York-based investment firm VanEck, suggested the offering is more indicative of a digital asset fund than a publicly listed company:
At what point does a securities offering that raises dollars with the purpose of investing in Bitcoin make a publicly listed company to be a listed fund/investment company?
MicroStrategy made waves in the crypto world during August, when the firm revealed it had adopted Bitcoin as its primary reserve asset after purchasing 21,454 BTC for $250 million. It then purchased a further 16,796 BTC for $175 million the following month. The purchases were made through Coinbase’s OTC and brokerage platform.
Just a few days ago on Dec. 5, MicroStrategy’s CEO, Michael Saylor, announced the firm had purchased a further 2,574 BTC priced at approximately $19,427 each for $50 million, bringing its total crypto holdings up to roughly 40,824 BTC.
At current market value, MicroStrategy’s BTC stash is worth nearly $784 million, meaning the firm is currently up 65% on its $475 million investment.
Citi Downgrades MicroStrategy Stock After Bold Bitcoin Bet
MicroStrategy was downgraded to “sell” from “neutral” on Tuesday.
Shares of MicroStrategy fell on Tuesday after Citibank reportedly downgraded the business intelligence firm over its “disproportionate” Bitcoin focus.
Citi analyst Tyler Radke issued a “sell” rating on MSTR shortly after the company announced it was raising more money to buy Bitcoin (BTC). Radke says CEO Michael Saylor’s “disproportionate focus on bitcoin” puts investors at considerable risk, especially after an “overextended” rally since September.
“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin.”
MicroStrategy’s share price has been surging since August when the company first announced its Bitcoin play. Many investors view MSTR as an indirect investment in Bitcoin, given the company’s vast digital currency reserves.
On Monday, MicroStrategy revealed plans to allocate another $400 million to its Bitcoin treasuries. To do so, the company plans to issue $400 million in convertible senior notes. As Cointelegraph reported, $400 million would increase the company’s Bitcoin reserves by more than 20,800 BTC.
MicroStrategy is by far the biggest corporate holder of Bitcoin. It currently has 40,824 BTC on its books, worth a combined $769.2 million.
Institutional investors and corporations are turning to Bitcoin as a hedge against inflation and dollar instability. Saylor has likened his company’s cash reserves to a “melting ice cube” as the purchasing power of the U.S. dollar continues to plummet. He believes asset inflation will grow to more than 20% per year.
New Institutional Player — MassMutual Purchases $100M Bitcoin
The investment is reportedly part of the firm’s strategy to take advantage of new opportunities while remaining diversified.
Massachusetts-based insurance firm MassMutual just announced that it has purchased $100 million in Bitcoin for its general investment account.
According to a report from The Wall Street Journal, the company purchased the coins — purportedly 5,470 Bitcoin (BTC) given the current price of $18,279 — through New York-based fund management company NYDIG. MassMutual also reportedly bought a $5 million equity stake in the firm, which holds $2.3 billion in crypto.
The report states that the investment is part of MassMutual’s strategy to take advantage of new opportunities while remaining diversified, providing “measured yet meaningful exposure to a growing economic aspect of our increasingly digital world.”
The purchase comes as major institutional players are adopting Bitcoin for the first time and going longer on crypto investments. In September, business intelligence firm MicroStrategy purchased more than $425 million in Bitcoin as a reserve asset. Earlier this week, the company announced it would invest the proceeds from a $400 million securities offering into Bitcoin as well.
MassMutual reportedly oversees more than $235 billion in its general investment account as of Sept. 30.
MassMutual Bitcoin Purchase Proves Crypto Demand Is Rising, JPMorgan Says
Even a nominal investment from insurance firms and pension funds could be significant for Bitcoin.
MassMutual’s $100 million Bitcoin (BTC) purchase shows that the demand for cryptocurrency will be growing further, according to strategists at major investment bank JPMorgan.
In an investor note on Dec. 11, JPMorgan strategists including Nikolaos Panigirtzoglou reportedly suggested that Bitcoin adoption is now expanding from family offices and wealthy investors to bigger investors like insurance firms and pension funds.
As reported by Bloomberg, the experts said that insurance firms and pension funds are unlikely to invest large amounts in Bitcoin, but even a small shift toward crypto could be significant.
If pension funds and insurance companies in the United States, Euro area, the United Kingdom and Japan allocate 1% of their assets to Bitcoin, Bitcoin demand would grow by an additional $600 billion, the strategists calculated. This is almost double Bitcoin’s market capitalization, which stands at $356 billion at publishing time, according to data from CoinMarketCap.
JPMorgan strategists wrote, “MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. […] One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
Massachusetts-based insurance firm MassMutual announced on Dec. 11 that the company bought $100 million in Bitcoin for its general investment account. MassMutual told Cointelegraph that the investment is part of a broad strategy with the goal of achieving “measured yet meaningful exposure to a growing economic aspect of our increasingly digital world.”
MassMutual’s foray into Bitcoin comes amid major institutional player MicroStrategy planning a $400 million securities offering to invest in BTC. MicroStrategy adopted Bitcoin as its primary asset after purchasing $425 million worth of Bitcoin in August and September.
MassMutual’s Bitcoin Buy May Presage $600B Institutional Flood: JPMorgan
JPMorgan analysts have said the recent bitcoin purchases by Massachusetts Mutual Life Insurance Co. are a sign of growing mainstream acceptance for the cryptocurrency.
* “MassMutual’s bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors,” JPMorgan’s strategists said, according to Bloomberg on Monday.
* “One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example,” they added.
* On Thursday, the 169-year old insurance firm announced bitcoin purchases worth $100 million, as well as a $5 million equity stake in NYDIG – a financial services firm focused on bitcoin with $2.3 billion in the asset under management.
* MassMutual’s move suggests insurance firms and pension funds are beginning to look at bitcoin as an investment/reserve asset alongside increased demand from wealthy investors and family offices.
* According to JPMorgan, bitcoin may find an additional demand of $600 billion if pensions insurance firms in the U.S., European Union, U.K. and Japan allocate 1% of assets to the top cryptocurrency.
* Regulatory hurdles, however, may complicate matters for such firms, limiting their participation in the bitcoin market, the strategists said.
If pension funds and insurance companies in the U.S., euro area, U.K. and Japan allocate 1% of assets to Bitcoin, that would result in additional Bitcoin demand of $600 billion, the strategists said. The cryptocurrency’s current market capitalization is about $356 billion, according to CoinMarketCap.
At the same time, traditional investors like insurers and pension portfolios face regulatory hurdles relating to risk levels and liability mismatches, likely limiting how much they can put into Bitcoin, the JPMorgan strategists wrote.
MicroStrategy Completes $650 Million Bond Sale To Finance Next Bitcoin Purchase
The bond sale underscores MicroStrategy’s conviction that Bitcoin is a generational investment opportunity.
MicroStrategy (MSTR), a leading business intelligence firm, announced Friday that it has raised $650 million worth of convertible bonds to finance more Bitcoin (BTC) purchases, underscoring CEO Michael Saylor’s conviction in the flagship digital asset.
The company confirmed Friday that it had sold $650 million worth of convertible senior notes at a rate of 0.750% due in 2025. The interest rate is payable semi-annually on June 15 and December 15 beginning in 2021.
According To The Press Release:
“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending identification of working capital needs and other general corporate purposes.”
The securities were issued under Rule 144A of the Securities Act of 1933 and will be available to institutional investors only.
The raise was finalized mere days after the company first announced plans to leverage bond proceeds to acquire more Bitcoin. As Cointelegraph previously reported, MicroStrategy was initially targeting a raise of $400 million. At $650 million, the firm can purchase over 36,300 BTC at current prices.
MicroStrategy shocked the world earlier this year when it announced that it would convert most of its balance sheet to Bitcoin. At the time, CEO Michael Saylor said his company was sitting on a “$500 million melting ice cube” of cash.
The company currently sits on 40,824 BTC representing over $734 million. That represents a gain of nearly $260 million from the basis acquisition price.
Wall Street analysts are concerned that MicroStrategy has become overexposed to Bitcoin, whose decade of volatility has kept many institutional investors on the sidelines until only very recently. Citbank recently downgraded MSTR to “sell” from “neutral” because of its “disproportionate” BTC focus.
MicroStrategy may be the largest corporate Bitcoin holder, but it isn’t the only one. On Thursday, Massachusetts-based insurance firm MassMutual announced it had purchased $100 million in BTC for its general investment account, making it one of the largest corporate holders. Publicly-traded companies like Galaxy Digital (GLXY), Square (SQ) and Hut 8 Mining Corp (Hut-8) have invested between $36 million and $134 million in Bitcoin. Each company is now sitting on significant profits.
After Microstrategy Downgrade, Analysts Recommend Smallcap Crypto-Centric Bank
Motley Fool analysts think this smallcap bank stock might be the next to benefit from Bitcoin’s surge.
Following a Citi report downgrading business intelligence firm Microstrategy’s stock to a “sell” rating, analysts for popular trading website the Motley Fool have recommended a lesser-known bank stock that also has an emphasis on cryptocurrencies.
Last Tuesday, Citi analyst Tyler Radke downgraded Microstrategy (NASDAQ:MSTR) shortly after the firm announced a debt purchase that would bring its Bitcoin holdings up to a nearly $1 billion mark.
The report chided the company, which at points has seen share prices more than triple from $92 yearly lows, for its “disproportionate” focus on bolstering its BTC holdings, and said that the current run is “overextended.”
However, in a recap article today analysts for the Motley Fool suggested the little-known, crypto-focused smallcap Silvergate Capital (NYSE: SI) might be worth a look for traders aiming to capitalize on the next crypto play.
Silvergate — the La Jolla, California-based bank with over $2 billion in assets under management — boasts an impressive list of cryptocurrency firms as clients, including Coinbase, Paxos, Circle, Gemini, and Polychain Capital.
Motley Fool contributors Matt Frankel and Justin Moser noted the banks 21-year streak of profitability, $50 million in BTC on the books, and a lending book featuring primarily commercial mortgages. Both analysts also recommended the bank as a superior investment to spot BTC.
A previous Motley Fool article earlier in the week also called attention to the crypto exchange infrastructure Silvergate has built for its clients, the Silvergate Exchange Network (SEN). SEN operates as a 24-hour intermediary between exchanges and their institutional clients buying and selling cryptocurrencies, as opposed to normal banks which would be limited by normal working hours. SEN has reportedly cleared over $100 billion in volume since inception.
SI currently sits at a 36.69 price-to-earnings ratio, offers a 10.36% dividend, and is up nearly 100% on the year.
Silvergate and Microstrategy aren’t the only publicly-traded blockchain stocks enjoying a surge in investor interest. Mining giant Riot Blockchain is also on a tear after appointing new members to its board.
Ruffer Investment Confirms Massive Bitcoin Buy of $744M
U.K.-based Ruffer confirmed the size of its tremendous bitcoin investment from November in an email to CoinDesk Wednesday.
* “Ruffer’s exposure to bitcoin currently totals around £550m, equivalent to around 2.7% of the firm’s assets under management,” a spokesperson told CoinDesk in an email.
* Based on current exchange rates, £550 million is worth $744.26 million or roughly 45,000 BTC based on November 2020 prices.
* The investment was “primarily a protective move for portfolios” to “act as a hedge” against “some of the risks that we see in a fragile monetary system and distorted financial markets.”
* Ambiguous wording in Ruffer’s initial shareholder memo created uncertainty whether the investment was 2.5% of the multi-strategy fund or 2.5% of the funds total more than $20 billion in managed assets.
Ruffer Investment Used Coinbase To Execute $745M Bitcoin Buy
When Ruffer Investment wanted bitcoin in November it turned to One River Digital who went to Coinbase to hit the “buy” button on a purchase now worth over $745 million, Ruffer representative Jonathan Atkins confirmed to CoinDesk.
In a recent portfolio update, Ruffer alluded to the involvement of the “world’s largest custodian of digital assets” without naming names. “Access to the bitcoin is controlled by multi-layer security protocols,” Ruffer wrote of its cold-storage setup. A second source confirmed to CoinDesk that Coinbase was the custodian described in Ruffer’s portfolio update. Coinbase Custody announced last month it was storing over $20 billion in customer assets.
The revelation sheds light on how large investors are entering the bitcoin market: namely through trusted partners. Big bets in recent weeks by everyone from MassMutual to Guggenheim are seen as the driving force behind bitcoin’s current price rally. (MassMutual went with NYDIG for its $100 million bitcoin buy.)
As CoinDesk reported Tuesday, Ruffer invested 2.5% of its $27 billion portfolio into bitcoin in November. The following day, One River Digital, a crypto-focused offshoot of volatility hedge fund One River Asset Management, came out of stealth proclaiming it had already brokered $600 in bitcoin and ether for its institutional clients.
Coinbase confirmed on Wednesday that it was conducting trade execution and crypto custody for One River Digital. It declined to comment for this story.
Ruffer owns a stake in One River Digital. Billionaire hedge fund manager Alan Howard does as well. One River Digital did not respond to a request for comment.
The Ruffer revelation shows just how far San Francisco’s Coinbase is reaching into the world of fund management.
Earlier this month, it revealed itself as the “primary execution partner” for MicroStrategy’s $425 million bitcoin purchase in the fall. A case study published by Coinbase explained how the firm pulls off market-swamping allocations without alerting traders.
Coinbase is now readying itself for a Wall Street debut. On Thursday, as bitcoin continued to race past its $20,000 ceiling into new all-time highs, the exchange announced it had confidentially filed for an initial public offering with U.S. regulators.
Ruffer’s bitcoin philosophy
Meanwhile, Ruffer explained in its portfolio update that macroeconomic factors guided the manager’s bitcoin bet.
“The current macroeconomic environment is set up perfectly for an asset that blends the benefits of technology and gold,” Ruffer said, adding:
“Negative interest rates, extreme monetary policy, ballooning public debt, dissatisfaction with governments – all provide powerful tailwinds for bitcoin at a time when conventional safe-haven assets, particularly government bonds, are perilously expensive.”
Ruffer said bitcoin has grown to meet this moment.
“Since 2017, billions of dollars have been invested in the infrastructure needed to support this wave of bitcoin adoption; many of the impediments to institutional investors have been dismantled.”
Ruffer’s analysis was clear: the institutions are here with more on the way; the cypherpunks are fading fast. Wrote the $27 billion mega-manager:
“[Bitcoin] seems set to move from being loved by the anti-establishment to being embraced by the dominant interests of the establishment.”
UK Investment Manager Sells Off Half BTC Holdings After $750M Win
“The economic environment for Bitcoin right now could not be better,” said Duncan MacInnes.
United Kingdom-based Ruffer Investment Management has made more than $750 million from its Bitcoin investment in less than two months, but it has decreased the size of its holdings.
According to a report from British news outlet The Telegraph, Ruffer saw “immediate fireworks” after investing roughly 2.5% of its assets into Bitcoin (BTC) in November 2020, resulting in millions of dollars in gains as the price of the crypto asset rose past $20,000 and on to a new all-time high of more than $42,000 in January.
Rather than HODLing it all, however, the firm reported that it had sold roughly half its BTC holdings.
“The 2.5% allocation we made in November across all our funds, which totalled around $600 million — this has more than doubled so we decided to take out our ‘book cost’ and take $650 million in profits,” said Ruffer co-manager Duncan MacInnes. “We still have around $700 million left in and are currently up by $750 million overall.”
MacInnes said Ruffer was initially skeptical about investing in Bitcoin in 2017 but admitted the circumstances had changed in the last four years, with many people turning to digital solutions accelerated by the pandemic. He said retail investors are “desperate for alternative safe haven assets” and institutions are buying into the crypto asset as well.
“The economic environment for Bitcoin right now could not be better.”
In November 2020, Ruffer called adding Bitcoin to its Multi-Strategies Fund a defensive move against the “continued devaluation” of fiat money. The firm reduced its exposure to gold and invested roughly 2.5% of its assets into BTC.
Ruffer chairman Jonathan Ruffer later called Bitcoin a “seemingly non-sensical asset, but one that makes absolute sense for how we see the world.”
At time of publication, the price of Bitcoin is $36,816, having risen 6% in the last 24 hours.
Bitcoin Whale Emerges With $1 Billion, Alan Howard’s Backing
Bitcoin is a ‘convex bet’ says CEO of institution with $600M BTC exposure
Another mainstream giant unveils its bullish position on Bitcoin.
2020 has been a big year for mainstream Bitcoin (BTC) adoption. One of the most recent entrants to the space is One River Digital Asset Management, a hedge fund headed up by CEO Eric Peters.
The firm expects to own approximately $1 billion in Ethereum (ETH) and BTC by the first half of next year, and has already accumulated roughly $600 million worth of the asset, said a Bloomberg report on Wednesday. Alan Howard, Brevan Howard Asset Management’s co-founder and a known billionaire, is also involved in the endeavor.
Peters’ position on Bitcoin lines up with other players’, who view Bitcoin as a potential gold-like inflation hedge during uncertain economic times. Taking interest rates, money printing, and other factors into account, Peters told Bloomberg:
“There definitely are more risks to this than gold, which has been around for thousands of years, but there’s also way more convexity […] There are very few convex bets that’ll help your portfolio when these macro forces start playing out.”
Peters has boarded a thought leadership train that sees BTC becoming more and more prevalent in the days ahead. He explained:
“There is going to be a generational allocation to this new asset class […] The flows have only just begun.”
One River did not just buy the $600 million in BTC and ETH yesterday, however. According to the article from Bloomberg, Peters completed the purchases in November, sneakily acquiring stacks of the assets without stirring public hype.
Bitcoin’s price recently cracked $20,000, and remains above this level at time of publication.
Institutional Financier deVere CEO Says Bitcoin Will Rise 50% And ‘Possibly Double’ In 2021
Bitcoin’s (BTC) parabolic rally is only just getting started, according to Nigel Green, founder and CEO of the Dubai-based financial advisory firm deVere Group.
In an article that was published to Newsmax on Thursday, Green boldly proclaimed that Bitcoin will have another “record-breaking year” in 2021, with prices set to explode by at least 50% and “possibly double.”
He made the prediction just as Bitcoin peaked above $23,000 on Thursday for the first time ever. The flagship digital currency would go on to trade as high as $23,777 on Bitstamp before experiencing a minor pullback.
Based on current values, Green expects BTC to reach between $34,500 and $46,000 at some point next year.
While acknowledging that Bitcoin won’t go up in a straight line, Green says the influx of institutional investors will lead to a groundswell of consumer interest, creating the perfect storm for price discovery.
“Some of the world’s biggest institutions – amongst them multinational payment companies and Wall Street giants – pile ever more into crypto, bringing with them their enormous expertise and capital, this in turn, swells consumer interest.”
Green’s deVere Group has spent quite a bit of time researching digital assets. Last month, the advisory firm released survey results showing that 73% of respondents are bullish towards cryptocurrencies, up from 68% in 2019. This so-called survey of millionaires underscores an important shift underway within smart-money circles.
Institutional demand has been a primary catalyst behind Bitcoin’s bull market and is one of the main reasons why the current uptrend differs markedly from the blow-off top in 2017.
Another major catalyst is the narrative that Bitcoin is a hedge against inflation and macroeconomic uncertainty — something Green touched upon in his article.
“[…] with governments continuing to support economies and increase spending due to the pandemic, investors are increasingly going to look to Bitcoin as a hedge against the legitimate inflation concern.”
DeVere Group CEO Sold Half of Bitcoin Holdings At Christmas Highs
Nigel Green, CEO of U.K.-based financial advisory firm deVere Group, has said he sold 50% of his bitcoin holdings over Christmas as the cryptocurrency’s price surged to new highs.
* In a blog post late last week, Green said that as bitcoin (BTC, -3.89%) neared $25,000 per coin, he made the decision to sell half his holdings, explaining, “It’s better to sell high and re-buy in the dips.”
* “The steady gains in the price of bitcoin has made the digital currency the top-performing asset of 2020, up over 200%. As such, I felt the time was right for profit-taking,” he said.
* The CEO stressed that his decision to sell was “not due to a lack of belief in bitcoin, or the concept of digital currencies.”
* “I believe that the future of money is cryptocurrencies,” he wrote, adding that the longer-term price trajectory for bitcoin is “undoubtedly upwards.”
* DeVere Group estimates that nearly three-quarters of high-net-worth individuals will be invested in cryptocurrencies before the end of 2022, according to the post.
Investment Firm Jefferies ($51 Billion Assets Under Management) To Buy Bitcoin And Dump Gold
Jefferies is the latest investment company that plans to buy Bitcoin after reducing its gold holdings. It supports the narrative that people are moving their capital from gold into the top digital asset.
An official of the billion dollars investment firm unveils the future plans for purchasing the flagship cryptocurrency. Christopher Wood, the global head of equity strategy at Jefferies, says that the company is buying Bitcoin after dumping some amount of gold. The exposure to cryptocurrency will increase if the top cryptocurrency witnessed a price correction after recording an all-time high value.
Reduction of Gold from Portfolio
According to Wood, it will happen for the first time in years that the firm will add Bitcoin by releasing gold, which represents a 50% portfolio of Jefferies. He said:
“The 50 percent weight in physical gold bullion in the portfolio will be reduced for the first time in several years by five percentage points with the money invested in Bitcoin. If there is a big drawdown in bitcoin from the current level, after the historic breakout above the $20,000 level, the intention will be to add to this position.”
As per the data of Q3, the investment company is holding $51 billion in assets under management. Per the report, the BTC holdings will be transferred into a “long-only global portfolio.”
As per the portfolio, the gold allocation will reduce from 50% to 45% by dedicating a 5% allocation to the top digital currency. 30% allocation of the portfolio is in the “Asia ex-Japan equities,” while 20% is in the mining stocks of gold.
However, Wood claims that gold is not going anywhere, but its adoption would increase because the central banks’ policies will increase inflation.
Over this initiative, market analysts Bruce Ng and Juan Villaverde believe that the flagship cryptocurrency has a lot of potential, and the entry of big institutions in the digital space would push its price value as well as market cap upward.
They draw a scenario that if 10% of the value from government bonds ($30 trillion) goes into both top hedge assets, including Bitcoin and gold, then $3 trillion will add into the market caps of both assets.
“$1.5 trillion going into gold – which is 15% of gold’s market cap (now about $10 trillion). And…$1.5 trillion going into Bitcoin – which is 4.4 times its market cap (now about $338 billion).”
Jefferies’ Wood Cuts Gold Exposure In Favor Of New Position In Bitcoin
Christopher Wood, global head of equity strategy at investment firm Jefferies, cut his exposure to gold for the first time in years in favor of bitcoin, Business Standard reported.
* Wood will be cutting the gold position in his long-only asset allocation for U.S.-dollar-based pension funds to 45% from 50% and initiating a 5% holding of bitcoin (BTC), the report said.
* Wood, while remaining bullish on the yellow metal, said he’ll add more BTC to the fund should the cryptocurrency drop significantly.
* The head of equity strategy had previously refrained from investing in BTC out of a fear of hacking and that it could have been declared illegal due to its sometimes use in nefarious purposes, the publication said.
* The remaining allocations in the fund are a 30% weighting in Asia ex-Japan equities and 20% in unhedged gold mining stocks.
* Wood is looking for a “dramatic cyclical recovery” after the pandemic subsides, Business Standard said.
MicroStrategy Buys The Dip — Now Has More BTC Than US Govt
Michael Saylor announces another $650 million purchase of Bitcoin as it price dips from weekend highs.
Business intelligence company MicroStrategy has added to its Bitcoin (BTC) stash, with a purchase of 29,646 BTC for a total of $650 million, an average of around $21,925 per Bitcoin
CEO Michael Saylor tweeted the news immediately following a pullback in price to $22,247, although it is unclear whether the acquisition coincided with this event.
MicroStrategy announced its intention to buy more Bitcoin earlier this month with a $400 million debt security sale to raise funds for the purchase. The bond sale ultimately brought in $650 million, which has now been used to buy Bitcoin as promised.
The company is now holding a total of 70,470 BTC, bought at an average price per Bitcoin of $15,964. This makes it the fifth-largest individual hodler of Bitcoin, one place ahead of the United States government, which reportedly owns 69,420 BTC.
MicroStrategy started its Bitcoin journey in August with a purchase of 21,000 BTC for $250 million. At the time, the company stated that its intention was to adopt Bitcoin as its primary reserve currency as a hedge against U.S. dollar inflation.
This was followed by further purchases, including a $425 million acquisition in September, which were carried out through Coinbase’s over-the-counter desk.
Most recently, Saylor encouraged fellow billionaire Elon Musk to follow his lead and use BTC to replace the U.S. dollar as Tesla’s primary reserve currency. This would encourage other S&P 500 firms to follow suit, argued Saylor, compounding the benefits of the move.
Scaramucci’s SkyBridge BTC Fund Launches With $25 Million Investment
The ex-White House communications director sees a big move for BTC in the next 5 to 10 years.
Just two days after filing a Form D exemption with the U.S. Securities and Exchange Commission, Anthony Scaramucci’s hedge fund, Skybridge Capital, has launched its proposed Bitcoin (BTC) fund.
In a Dec. 23 interview on the Yahoo Finance channel, Scaramucci claimed that the effective registration with the SEC had now been completed and the fund had been started with $25 million of SkyBridge’s own capital.
The fund will be opened to accredited investors on Jan. 4, with a minimum subscription of $50,000, although Scaramucci claimed that the company was already putting together a “nice book” of preliminary orders.
In the interview Scaramucci claimed that SkyBridge is trying to “democratize the hedge-fund industry,” and that “Bitcoin is still somewhat difficult to buy.”
He followed this by praising Grayscale, which offers a fund providing easy Bitcoin exposure for institutional investors and currently holds over half a million Bitcoin.
However, the SkyBridge fund will be cheaper, he explained, charging an annual fee of 0.75% against Grayscale’s 2%. It will also trade at the net asset value of Bitcoin rather than the 20-30% premium seen with Grayscale, Scaramucci claimed. The fund will rely on Fidelity Digital Assets for custody of the Bitcoin.
Scaramucci pointed out Bitcoin’s attribute as a store of value, and drew a comparison between its current $440 billion market cap and gold’s $10 trillion, saying:
“So, we think there’s a very large move for Bitcoin over the next five to ten years.”
Another NASDAQ-Listed Firm To Invest $100 Million In Bitcoin
Greenpro Capital Believes In the Mass Adoption of Bitcoin
In a statement, the company said it believes in the ongoing mass adoption of Bitcoin by banks, hedge funds, and insurance companies, further adding that it endorses Bitcoin as a reliable store of value.
Towards this end, its CEO CK Lee has instructed Greenpro Capital investment bankers, to in Q1 2021, raise debt of up to $100 million. However, they will also buy digital gold from their cash reserves.
Through strategic management of their balance sheet and a Bitcoin fund—part of their crypto strategy, they can produce “significant future value” for the company.
Other than Bitcoin, Greenpro Capital believes that other top cryptocurrencies like Ethereum provide the opportunity for better returns, helping preserve value, and is an alternative that’s better than holding cash.
Public Companies Holding Bitcoin
According to statistics from Bitcoin Treasuries, more public firms are pouring their funds into Bitcoin. MicroStrategy under the leadership of Michael Saylor, for instance, owns 70,470 BTC.
A few weeks back, they announced another purchase of $650 million, pushing their total to over $1.9 billion of BTC at spot rates, in the process raking over $850 million in profits.
Repeatedly, Saylor believes Bitcoin is a store of value and the underlying network is a new financial layer that will power internet commerce over the years.
In a recent tweet, he seemed to be urging market leaders to tweak their investment strategy, explaining that it was impossible to pursue a corporate vision by investing capital in a currency (USD) that’s collapsing in value. Earlier, he said Bitcoin was the first engineered safe-haven describing the asset as “hope.”
#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.
Morgan Stanley Now Holds 10% Stake In Michael Saylor’s MicroStrategy
MicroStrategy’s massive push into Bitcoin is paying off, with shares skyrocketing and huge new investment from Morgan Stanley.
Per a filing with the Securities and Exchange Commission released on Jan. 8, investment bank Morgan Stanley had acquired 792,627 shares in business intelligence firm MicroStrategy. The investment represents a 10.9% stake in a firm that has made massive investments in Bitcoin over the past several months.
The purchase apparently happened on Dec. 31. MicroStrategy has had a colossal month, seeing its shares move from $289 on Dec. 8 to $545 as of Jan. 8.
In August, MicroStrategy took bold steps into crypto, making Bitcoin its primary reserve asset. At the time, CEO Michael Saylor said of the firm’s choice:
“This is not a speculation, nor a hedge. It is a deliberate corporate strategy to adopt the Bitcoin Standard.”
Just weeks ago, MicroStrategy announced a $400 million securities offering with the stated purpose of raising funds to buy more Bitcoin. As of Dec. 21, the firm had stockpiled 70,470 Bitcoin.
At prices as of publication time, MicroStrategy’s BTC stockpile was worth over $2.8 billion.
Institutional investors like Morgan Stanley have warmed up to crypto assets considerably over the past year. Many have attributed Bitcoin’s recent bull market to this institutional uptick, as compared to the retail FOMO that was so critical to BTC’s 2017 highs, which subsequently fell apart.
MicroStrategy Stock Finally Takes A Breather Following Massive BTC-Inspired Rally
MSTR declined by as much as 12.6% on Monday as Bitcoin pulled back sharply from $40K levels.
Shares of MicroStrategy (MSTR), a business intelligence firm with considerable exposure to Bitcoin (BTC), declined sharply on Monday, as profit-taking ensued following a parabolic rally over the past month.
The stock touched an intraday low of $464.51 in New York trading, representing a decline of almost 13%. It would later pare losses to trade around $500 a share. At current values, the company has a total market capitalization of around $4.6 billion. Last week, the stock peaked just below $512, marking a new all-time high.
The broader equity market was also under pressure on Monday, with the S&P 500 Index and tech-heavy Nasdaq each falling more than half a percent.
MSRT’s pullback coincided with a sharp decline in both the price of Bitcoin and the broader crypto markets, as investors took profits following a relentless surge over the past three weeks. Even with the decline, MSRT’s share price has gained a whopping 300% since last summer when CEO Michael Saylor first disclosed the company’s Bitcoin position.
MicroStrategy is the world’s largest corporate holder of Bitcoin, with 70,470 BTC on its books as of Monday, according to industry data.
The firm has been buying up the digital asset on the belief that Bitcoin represents a “dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
Despite its dramatic appreciation over the past few months, Bitcoin remains a highly volatile asset.
At the time of writing, BTC was just under $32,000, having declined 20% over the past 24 hours.
Bitcoin Price Bounces Above $32K As MicroStrategy ‘Buys The Dip’ With $10M
A further commitment to its treasury sees MicroStrategy join Grayscale as this week’s big buyer while others keep selling.
Bitcoin (BTC) showed signs of a resurgence on Jan. 22 after a trip below $30,000 produced fresh buyer support.
BTC Price Seals 8.5% Daily Bounce
Data from Cointelegraph Markets and TradingView showed a stronger trading day for BTC/USD on Friday, with daily gains at 8.5% at the time of writing.
The turnaround follows a turbulent 24 hours in which Bitcoin slid to $28,950 — a key level when it comes to support from whales and only its second dip below $30,000 this year.
At the same time, MicroStrategy, well known for its ever-increasing Bitcoin treasury, confirmed that it had purchased 314 BTC to bring its total hoard to 70,784 BTC.
“Microstrategy just bought 314 more #Bitcoin for $10M. @michael_saylor bought the dip,” Twitter-based information resource Documenting Bitcoin summarized, referring to the company’s CEO, Michael Saylor.
The latest buy-in came at an average cost of $31,808 per Bitcoin and joins asset manager Grayscale’s ongoing purchases that defy overall selling action in the past few weeks.
All Eyes On Whales At $29,000
Among other major BTC investors, meanwhile, interest remained focused on the area at just below $30,000.
According to monitoring resource Whalemap, that area is crucial to hold in order to avert a further price dip on BTC/USD, one that could take the pair closer to $20,000.
Thanks To Bitcoin, MicroStrategy Stock Is Up 113% Since Being Downgraded By Citigroup
MSTR stock has surged by roughly 113% since Dec. 8 when it was downgraded by a Citigroup analyst.
On Dec. 8, 2020, Citigroup, one of the largest banks in the world, downgraded MicroStrategy’ss stock (MSTR). Since then, MSTR stock is up 113.27% from $289.45 to $617.31, as the price of Bitcoin (BTC) rallied.
In the same period, the Citigroup stock has declined slightly by 0.63%, from $58.36 to $57.99.
Why Has MicroStrategy Stock Performed So Strongly Despite The Downgrade?
MicroStrategy has been investing its treasury holdings in Bitcoin, making BTC is treasury reserve asset. Currently, it is the biggest public company holder with over 70K BTC worth roughly $2.4 billion at today’s prices.
Moreover, on Dec. 9, 2020, MicroStrategy announced raising $550 million in capital from convertible bonds.
In an official statement, MicroStrategy explicitly said that it intends to invest in Bitcoin with the proceeds of the bond. This is also the statement that is said to have triggered Citi to downgrade MicroStrategy. The statement read:
“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes.”
At the time, Citigroup analyst Tyler Radke issued a sell rating. He acknowledged that the return on MicroStrategy’s Bitcoin investment has been “impressive,” but said the market is overpricing the core business of the firm. He wrote:
“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin.”
Since December 2020, however, the price of Bitcoin saw an explosive rally. While the skepticism toward the core business of MicroStrategy could have some merit, BTC saw a rally of over 100% in the last month of the year.
In just December, Bitcoin rallied from $18,319 to over $42,000 on Binance, outperforming most assets in both the stock market and the crypto market.
MicroStrategy remains an important multi-billion dollar business intelligence firm with strong core business.
But as long as the price of Bitcoin continues to increase in the near term, it will likely have a positive impact on the stock price of MSTR.
Michael Saylor, the CEO of MicroStrategy, remains fully confident in the company’s position on Bitcoin, and often buying the price dips. In the fourth quarter financial results for 2020, Saylor wrote:
“Going forward, we continue to plan to hold our bitcoin and invest additional excess cash flows in bitcoin. Additionally, we will explore various approaches to acquire additional bitcoin as part of our overall corporate strategy.”
MicroStrategy Adds To Bitcoin Trove With Another $10M Purchase
* The business intelligence company added 295 BTC (+5.43%) to its hoard, per a Tuesday filing.
* This marks the second $10 million purchase this year, after MicroStrategy bought 314 BTC less than two weeks ago, per CoinDesk’s prior reporting.
* MicroStrategy’s most recent buys were executed at an average price of $33,810, suggesting that it may have accumulated the new coins after the market dropped following a price spike around social media frenzy stirred by Elon Musk’s Twitter account.
* On the company’s earnings call last week, CEO Michael Saylor said his company will “continue to actively manage” its balance sheet and “progressively acquire more bitcoin” at prices “that probably keep going up.”
* MicroStrategy now holds 71,079 BTC, per the filing.
1,400 Sign Up For MicroStrategy’s Corporate Bitcoin-Buying Bootcamp
MicroStrategy, the business intelligence firm that has enjoyed 135% gains on the $1 billion in BTC it purchased last year, is hosting a webinar on corporate Bitcoin strategy.
Leading global business intelligence firm MicroStrategy is hosting an online seminar this week to explain the legal considerations for firms seeking to integrate Bitcoin into their businesses and reserves.
A Feb. 3 tweet from MicroStrategy CEO, Michael Saylor, said that representatives of more than 1,400 firms have already signed up for the event — which is dubbed “Bitcoin for Corporations: Legal Considerations.”
If you are interested in the legal considerations firms face while integrating #Bitcoin into their corporate strategy, you are not alone. We have professionals from more than 1400 firms joining us tomorrow for this discussion. There is still time for your legal team to attend. https://t.co/fid9nrZUfP
The seminar will take place on Feb. 3 and Feb. 4, with five one-hour sessions scheduled for the first day, and twice as many 30-minute sessions slated for the second.
The first day will feature presentations from Saylor, the firm’s president and CFO Phong Le, along with representatives of legal firms specializing in digital assets. The topics discussed will include strategies for incorporating Bitcoin into treasury reserves and related questions regarding the accounting, tax, legal, and auditing considerations for firms who pursue this strategy.
The second day will feature presentations from top crypto exchanges and fund managers, including Coinbase, Binance, Grayscale, and Galaxy Digital.
In August, MicroStrategy made headlines after revealing it had purchased 21,000 BTC for $250 million. The following month, Saylor announced the firm had purchased an additional 16,796 Bitcoin for $175 million, with the firm continuously purchasing roughly 0.19 BTC every three seconds over 74 hours to complete the transaction.
In December, MicroStrategy issued $650 million worth of bonds which were quickly mobilized to purchase 29,646 BTC. The firm purchased an additional 314 Bitcoin for $10 million in late January, and a further 295 BTC for $10 million this week, bringing its Bitcoin reserves up to 71,079 BTC, or 0.38% of Bitcoin’s circulating supply.
While MicroStrategy paid $1.095 billion to accumulate its BTC holdings, current prices value the stash at $2.57 billion — a gain of 135%.
Despite the firm’s rampant Bitcoin accumulation leading to its shares being downgraded by Citigroup on Dec. 8, its stock has since rallied by 113%.
Bitcoin Is the Scarcest Asset, MicroStrategy CEO Saylor Says
Elon Musk made waves with Tesla Inc.’s announcement that it bought $1.5 billion of Bitcoin, but he is far from the first chief executive to use his rainy day fund to invest in the world’s largest cryptocurrency.
“In an expansionary, monetary environment, you want scarce assets,” said Michael Saylor, MicroStrategy Inc.’s chief executive officer, in an interview on Bloomberg Television. “The scarcest asset in the world is Bitcoin. It’s digital gold.”
Saylor has been one of the most ardent supporters of converting company cash to Bitcoin, and said last year that the Federal Reserve’s relaxing of its inflation policy helped convince him to invest the enterprise-software maker’s reserves. Bitcoin advocates point to the 21 million coins that can only ever be mined under the current version of the cryptocurrency’s software.
The Limit Is Expected To Be Reached In 2140.
Musk has flirted with Bitcoin for years and in December posted on Twitter a suggestive image indicating he was tempted by the token. He also inquired about converting “large transactions” on Tesla’s balance sheet into Bitcoin in a Twitter exchange with Saylor. In a series of tweets, Saylor encouraged the billionaire to shift dollars from the EV company to the cryptocurrency.
MicroStrategy holds approximately 71,079 Bitcoins, according to a February filing. The holding are valued at about $3.2 billion based on Monday’s price. Saylor even issued $650 million in convertible bonds to help finance the purchases.
Saylor held a webinar last week on how corporate treasurers should move some cash into the digital coin, which he claims drew over 1,400 firms on the session in legal considerations for integrating Bitcoin into a company’s corporate strategy. On Bloomberg Television Monday, Saylor said that the whole conference attracted about 8,000 firms.
Gold will lose out to Bitcoin in reallocations, Saylor added.
“If we bought gold instead of Bitcoin, we would be down $2 billion. It would have been a disaster,” he said. “Once people start thinking about what they want, which is a non-sovereign, safe-haven store of value, they’re going to realize that Bitcoin does the job of gold better, and you’re seeing all of the institutional flows move out of gold into Bitcoin.”
Bitcoin Is A ‘Masterpiece Of Monetary Engineering’ Michael Saylor Tells Austin Davis
Michael Saylor, CEO of MicroStrategy, applies his training in thermodynamics to Bitcoin in an exclusive interview with Bitcoin pioneer and futurist Austin Davis.
The financial and economic narratives surrounding Bitcoin (BTC) barely scratch the surface of what makes the digital asset so unique, according to Michael Saylor, CEO of MicroStrategy.
In an exclusive interview with Austin Davis for Cointelegraph, Saylor calls Bitcoin “a masterpiece of monetary engineering,” and one that will likely go down in history as the world’s “first engineered monetary network.”
“Once you understand money is monetary energy and you understand Bitcoin is a monetary energy network, then you start to appreciate the fact that it either does or does not respect the laws of thermodynamics. If it doesn’t, it means it has a leak.”
That “leak,” Saylor says, is inflation, something Bitcoin has been mathematically designed to resist.
Saylor gave the interview in front of his now-famous 17th century Spanish Galleon, which was intricately crafted in the 19th century. Saylor described the model as a “work of art,” and one that provides him with added motivation. The fact that such vessels transported gold across the ocean in days of yore is certainly not lost on him.
Bitcoin has become an $850 billion asset following its latest price surge, but that’s only the beginning of its market impact, according to Saylor. He explains why Bitcoin will eventually “subsume gold” to become a $10 trillion asset before reaching $20, $30, $50 and even $100 trillion in value. At that point, Bitcoin will be the “core of the monetary planet.”
Saylor recently pitched Bitcoin to 1,400 corporate executives, where he discussed strategies for incorporating the digital asset into treasury reserves. In his interview with Davis for Cointelegraph, Saylor had a few words of wisdom about what hodlers should do with their Bitcoin if they hope to achieve generational wealth.
“You should buy it and hold it forever,” he opined. “My advice would be to borrow against it tax-free, never take capital gains, never take an operating income.”
Saylor’s outlook reflects his own strategy of perma-hodling the digital asset as part of a deliberate campaign to adopt the Bitcoin Standard. His conviction is not only based on Bitcoin’s underlying technology, but on the rapidly declining value of fiat currency. His now-famous analogy comparing fiat money to a melting ice cube appears to be resonating with his peers.
MicroStrategy Begins Hiring For Bitcoin Data Product
After buying 71,079 BTC, the business intelligence company is building its first bitcoin-related software product.
MicroStrategy is moving to assemble a blockchain analytics team. It would be the first bitcoin-related software product from a company best known for CEO Michael Saylor’s whopping bet on BTC as a reserve asset.
The firm, based in Tysons Corner, Va., put out calls on LinkedIn Friday for a Blockchain Data Analyst and Blockchain Data Engineer, explaining in job postings they will join a team “building an analytics platform with advanced metrics and insights for Bitcoin.”
MicroStrategy hinted last November its interest in building blockchain data products and even stated its intention to hire for them. Executives did not go public then with positions of interest and remained largely mum on program specifics, describing it as a potential data offering at the time.
But Saylor has been vocal about perceived deficiencies in bitcoin‘s data. He declared last October that “garbage” market data was holding bitcoin back. “Where can you find something so incredibly compelling that has such bad data around it relative to other assets?” Saylor said at the time.
For a man who spent much of last week all but pleading for his fellow CEOs to adopt the bitcoin standard, there’s an obvious, and vested, interest in improving upon the “garbage.”
MicroStrategy did not respond to a request for comment by press time.
The dual hirings add a rough picture to what could eventually become a commercialized intelligence offering for digital assets beyond just bitcoin. MicroStrategy wants analysts experienced with public, private and permission blockchains. (Bitcoin’s network is public and permissionless.)
A product would also produce shareable, digestible analytical insights, the listings indicate. MicroStrategy’s new engineer would be responsible for developing software capable of turning troves of data into “visualizations” that can be shared with “broader audiences.”
The job postings position MicroStrategy to capitalize on bitcoin Saylormania through the software intelligence space, which, as is so easy to forget for a company with 71,079 BTC on its balance sheet, is the firm’s longstanding business expertise.
MicroStrategy Files To Offer $600M In Notes In Order To Buy Yet More Bitcoin
The business intelligence firm said it expects to grant initial purchasers of the notes an option to buy an additional $90 million, making the total potential offering $690 million.
MicroStrategy, a business intelligence firm best known for the cryptocurrency it buys rather than for any product it sells, is planning to purchase even more bitcoin.
* Microstrategy on Tuesday said it intends to offer $600 million aggregate principal amount of convertible senior notes due 2027.
* The once-obscure firm, which jumped into the headlines last August for using treasury funds to buy bitcoin (BTC, +0.08%) and has since loaded up on the leading cryptocurrency to the point its holdings are worth more than $3.5 billion, said it intends to use the net proceeds from the note sale to buy even more.
* The Nasdaq-listed company said it expects to grant initial purchasers of the notes an option to buy an additional $90 million, making the total potential offering $690 million.
MSTR was trading down nearly 5% during early trading hours Tuesday.
MicroStrategy Raising $600M…. No, $900M To Buy More Bitcoin
Should the purchase go as planned, the business intelligence firm will hold more than $3.5 billion in Bitcoin as a reserve asset.
Following a Tuesday announcement that MicroStrategy would be planning to buy $600 million in Bitcoin (BTC) through a sale of convertible notes, the business intelligence firm has upped the ante by another $300 million.
MicroStrategy said on Wednesday it would be selling $900 million in convertible senior notes due in 2027 in a private offering to qualified institutional buyers. According to the firm’s estimates, the proceeds of the sale will be roughly $879 million. It added, however, that it could be as high as $1 billion “if the initial purchasers exercise in full their option to purchase additional notes.”
The business intelligence firm said it expected to close the offering on Friday, at which time it would “acquire additional Bitcoin.” With the price of Bitcoin reaching an all-time high of more than $51,000 on Wednesday, MicroStrategy could soon have an additional 19,000 BTC in its coffers.
MicroStrategy’s initial $250-million Bitcoin investment in August 2020 has more than doubled, given the crypto asset’s recent bull run. The business intelligence firm has since purchased 16,796 BTC for $175 million in September 2020, then 29,646 BTC for $650 million through the issuance of bonds in December 2020. In addition, the firm bought 314 Bitcoin for $10 million in late January, and 295 BTC for $10 million earlier this month.
Should the purchase go according to plan, the business intelligence firm will hold more than $3.5 billion of the crypto asset in its reserves, or roughly 90,000 BTC. This would mean the company would control 0.48% of Bitcoin’s circulating supply.
UK Firm Launches Service For Company Treasuries To Invest In Bitcoin
U.K.-based crypto firm BCB Group is looking to provide corporations with a way to put Bitcoin on their balance sheet by launching a dedicated treasury.
BCB Group, a global digital financial services firm, is planning to help corporations navigate cryptocurrencies like Bitcoin (BTC) by launching a dedicated service.
According to a Feb. 19 announcement, BCB Group has launched BCB Treasury, a new service designed for corporate treasury departments seeking to get involved in Bitcoin à la Tesla.
The new service aims to provide a specific solution enabling access to treasury management for companies willing to invest their capital into Bitcoin and other digital assets. With BCB Treasury, executives can enter, hold, manage, and report on a Bitcoin-focused treasury strategy, the announcement states.
BCB Group founder and CEO Oliver von Landsberg-Sadie said that the launch of BCB Treasury comes in response to growing demand triggered by the recent Bitcoin moves of companies like MicroStrategy and Tesla. The exec said that lots of companies are looking to invest in crypto to hedge against weak fiat currencies:
“We are seeing some powerful signals attracting companies to the digital asset space including the debasement of reserve currencies through unprecedented levels of central bank money supply.”
Last year, BCB Group’s core business BCB Payments received regulatory approval from the United Kingdom’s Financial Conduct Authority.
Headquartered in London, BCB Group is a major European crypto payment services provider, serving some of the world’s largest crypto companies like Coinbase, Gemini, Galaxy Digital, Bitstamp and Kraken. In early February, the firm appointed former Coinbase UK CEO Zeeshan Feroz as an advisor.
Coinbase Has Held Bitcoin On Its Balance Sheets Since 2012
The American exchange is offering services and advice to other private and publicly traded firms that want to hold digital assets in their treasuries.
United States-based cryptocurrency exchange Coinbase has revealed that Bitcoin (BTC) and other crypto assets have been a key component of its corporate treasury since the company’s founding back in 2012.
In a new announcement addressed to other corporate actors, the exchange presented its own experience in managing its treasury position in cryptocurrencies as a solid foundation for advising other private and publicly traded companies about how to deal with their own prospective investments.
In a newly published, highly detailed corporate treasury FAQ, the exchange provides a thorough overview of the kinds of investment, accounting and tax policies that companies would need to consider and adopt if they wish to diversify their treasuries into crypto.
The FAQ is both a general resource that covers all manner of regulatory, auditory, technical and investment questions about crypto from a corporate investment perspective and a pitch for companies to choose Coinbase in particular as a trade executor, consultant and professional custody partner.
The document also provides overviews of Bitcoin’s performance in recent years from a macro perspective, revealing its favorable comparison to other financial assets such as gold and the S&P 500. “Bitcoin’s strong absolute performance compensated investors for its volatility,” the exchange notes.
Risk-adjusted, the asset had a rolling annualized Sharpe ratio of 1.52 over the past five years, taking into account the 2018 bear market.
Corporate investment in cryptocurrencies, notably Bitcoin, has made headlines in recent weeks due to Tesla’s $1.5 billion investment in the asset, which resulted in rumored profits of up to $1 billion.
Notwithstanding this extraordinary windfall, analysts have said that while they expect a ripple effect among corporations following Tesla’s move, less than 5% of publicly traded firms are likely to be confident enough to invest at present, until there is more regulatory clarity.
MicroStrategy To Buy More Bitcoin After $1 Billion Purchase
MicroStrategy Inc., the enterprise software firm that has embraced Bitcoin investing, said it paid an average $52,765 for nearly 20,000 tokens last week after issuing $1.05 billion in convertible bonds.
The company’s latest foray into the cryptocurrency market pushed its total holdings past 90,000 coins at a cost of $2.17 billion, it said in a statement Wednesday. MicroStrategy said it will continue buying Bitcoin using “excess cash” and may issue more debt to finance the purchases. Shares of MicroStrategy jumped as high as 13%.
Bitcoin rebounded from a two-day rout, rising 3.5% to $49,625 as of 11:27 a.m. in New York. MicroStrategy has paid an average price of almost $24,000 for its coins, giving it a gain of about 100%.
Buying Bitcoin doesn’t come without its risks. The tokens can be subject to impairment losses that occur when the price dips below the carrying value at any time since the acquisition.
MicroStrategy reported $70.7 million in cumulative impairment losses as of the end of last year that the company attributed to Bitcoin’s price fluctuations, according to its 10K filing. If MicroStrategy bought its most recent Bitcoin before prices hit a low of $45,000 Tuesday, they could be looking at as much as an $151 million loss based on their average purchase price, according to data compiled by Bloomberg.
The company first announced Bitcoin buys last summer, saying it used corporate cash reserves. MicroStrategy has since issued two rounds of convertible bonds to make additional purchases.
MicroStrategy share have surged more than 400% in the past year.
More Bitcoin! Michael Saylor’s MicroStrategy Just Keeps Buying BTC
Michael Saylor announced MicroStrategy’s acquisition of another $15 million worth of Bitcoin as MicroStrategy continues to dollar-cost-average into BTC.
MicroStrategy’s Bitcoin buying spree shows no signs of slowing after CEO Michael Saylor announced the purchase of another 328 Bitcoin (BTC) on Monday. The acquisition, which was paid for in cash, cost the firm around $15 million and equated to an average coin price of $45,710 at the time of purchase.
The investment takes MicroStrategy’s total Bitcoin holdings to 90,859 coins — a haul worth $4.3 billion based on the current price. The firm has essentially dollar-cost-averaged into Bitcoin over the course of the past five months, leaving the average price of each of its Bitcoin purchases at $24,063 per coin. Saylor tweeted on Monday:
MicroStrategy has purchased an additional ~328 bitcoins for ~$15.0 million in cash at an average price of ~$45,710 per #bitcoin. As of 3/1/2021, we #hodl ~90,859 bitcoins acquired for ~$2.186 billion at an average price of ~$24,063 per bitcoin. $MSTRhttps://t.co/fGH5KacsPI
The firm first acquired Bitcoin in August 2020 when it made an initial $250 million outlay on 21,454 coins. MicroStrategy continued to buy more BTC at various points toward the end of 2020, eventually accumulating over 70,000 coins by the turn of the year.
In February, the business intelligence firm announced that it would raise an additional $900 million for further Bitcoin purchases — a sum that eventually exceeded $1 billion when an additional 19,452 coins were purchased last Wednesday.
MicroStrategy’s total outlay on Bitcoin stands at $2.18 billion, while current coin prices would value the firm’s holdings at $4.3 billion, meaning the firm would have made over $2 billion in five months were it to sell. However, there is little reason to suggest this will happen any time soon. Saylor previously said buying Bitcoin was one of the firm’s two corporate goals, along with growing its analytics software business.
No More ‘Bitcoin Effect’? Microstrategy Stock Falls By 50% In 17 Days
The excitement around Bitcoin has spilled over beyond spot price, data shows, with MSTR going from above $1,300 to $629 in just 17 days.
The Bitcoin (BTC) price correction isn’t just hurting individual hodlers — the biggest players are suffering in more ways than one.
Data from markets on March 5 revealed that MicroStrategy, which owns over 91,000 BTC, has seen its stock price dive by more than half in just three weeks.
MicroStrategy Keeps Buying BTC
On the day that the company confirmed that it had added another 210 BTC to its reserves at a cost of $10 million, MicroStrategy’s stock hit local lows of $628. At its peak in February, MSTR traded at just over $1,300.
The volatility is a commentary on the ups and downs of Bitcoin in its latest bull run, which has been characterized by wild swings in both directions.
Since beginning to add Bitcoin to its balance sheet in August last year, however, the overall impact on MSTR remains transformative. Prior to the move, it barely traded above $100.
“They now hold 91,064 bitcoin on their balance sheet,” Morgan Creek Digital co-founder Anthony Pompliano commented on the latest buy.
“This may be one of the greatest displays of conviction in public market history.”
MicroStrategy Dismisses Market Uncertainty, Buys Another Bitcoin Dip
The software company added another $10 million in BTC to its war chest.
MicroStrategy, a software company that’s been making headlines for its aggressive Bitcoin purchases, has made another $10 million purchase after Thursday’s market uncertainty.
As announced by CEO Michael Saylor, the company purchased another 205 BTC at an average price of $48,888, spending $10 million in cash to do so. This puts the company’s total Bitcoin holdings at 91,064 BTC worth $4.3 billion. The total cost basis of the BTC is $2,196 billion with an average purchase price of $24,119.
MicroStrategy’s latest Bitcoin purchase is one of its many “symbolic” buys where the company puts a few more million in BTC after every dip. While the software company began putting its existing assets into BTC in 2020, back when Bitcoin traded around $10,000, its latest purchases have yet to break even.
The latest major purchase, funded by a bond offering of $900 million, was done at an average price of $52,700 per BTC. Bitcoin’s price has wavered ever since amid a worsening outlook for risk assets on Wall Street.
Thursday’s buy coincided with a period of heightened tension on markets, as Fed chair Jerome Powell signaled that bankers do not think current conditions require additional intervention. Bond yields have been on a steady and powerful rise in the past weeks, which traditionally signals recovery from a recession and heightened inflation expectations.
This should normally reflect well on stocks and risk assets, but the narrative behind 2020’s unstoppable rise strongly relied on low bond yields and continuous Fed intervention as justification for heightened valuations.
Wall Street tension seems to be having some effect on Bitcoin, though MicroStrategy seems keen to continue on its previous path. Thursday’s purchase is largely symbolic, but the more important indicator is that MicroStrategy did not sell, despite its stock price having fallen 50% since February highs.
Chinese Publicly Listed Company Meitu Buys Bitcoin (BTC), Ether (ETH) Worth $40 Million
Meitu Buys BTC, ETH worth $40 Million.
In an announcement made on March 7, Siming District-headquartered Chinese technology company Meitu announced that it had bought BTC and ETH worth $40 million. For the uninitiated, Meitu has been listed on Hong Kong Stock Exchange since December 2016.
Specifically, Meitu purchased 380 BTC and 15,000 ETH at $47,105, and $1473, respectively.
The first publicly listed Chinese company to buy cryptocurrencies, Meitu’s decision to add the two largest cryptocurrencies to its balance sheet could potentially trigger a domino effect within the Chinese business ecosystem.
It is worthy of note that Chinese regulations on digital currencies are not the most lenient in the world.
Against that backdrop, it makes Meitu’s announcement all the more significant which indicates that other Chinese firms – and Asian businesses in general – could soon enter the fray of institutional investment in digital assets.
In fact, what is worthy of note that in addition to BTC, Meitu has also purchased ETH – something that companies like Square, MicroStrategy, and Tesla are yet to do.
Clearly, the move by Meitu confirms the days of “China bans bitcoin” FUD might be coming to an end for good. It remains to be seen whether the Chinese state or the financial regulator react in any capacity to Meitu’s entry into the crypto landscape.
Could Ethereum Be Institutional Investor’s Next Crypto Play?
While Meitu’s foray into the digital currency industry might be a welcome sign for the institutional interest in digital currencies in Asia, what is more significant is the company’s decision to buy ETH.
A potential narrative could play out where institutional investors that might have missed out on BTC could start accumulating ETH. After all, Ethereum is, by far, the largest smart contract platform in existence that has made booming landscapes such as that of DeFi and more recently, NFT, a possibility.
Interestingly, the rising institutional interest in ETH, along with the continually reducing ETH supply in exchange could very well be the catalysts that propel ether toward price discovery.
Norwegian Investment Firm Allocates $58M To Bitcoin And Crypto Ventures
Aker ASA has created a new subsidiary to hold Bitcoin on its balance sheet and invest in other companies in the crypto space.
Aker ASA, a $6-billion Oslo Bors-listed holding company, is set to begin investing in Bitcoin. According to a press release issued on Monday, Aker has created a new company called Seetee AS whose mission is to invest in Bitcoin (BTC).
The newly formed Seetee will also delve into the Bitcoin mining arena while looking to forge useful partnerships with major players in the crypto space. Indeed, Seetee has reportedly entered into a collaborative agreement with Blockstream.
According to Blockstream chief strategy officer Samson Mow, the Bitcoin infrastructure firm will work closely with Seetee on its BTC mining and sidechain implementation pursuits.
Despite the Norwegian government ending electricity subsidies for BTC miners back in November 2018, Bitcoin mining activity in the country still contributes to a significant proportion of the global hash rate distribution.
Outside China, the country ranks eighth in terms of global monthly hash rate, according to data from the Cambridge Bitcoin Electricity Consumption Index. As previously reported by Cointelegraph, Bitfury signed an agreement with a private equity firm to upgrade the latter’s $35-million BTC mining farm.
The press statement also reveals that the new company will look to pursue investments into other firms in the crypto and blockchain arena.
Aker will provide 500 million Norwegian kroner ($58 million) in initial capitalization for Seetee, with the new company holding all of its liquid investable assets in BTC. The move marks a significant departure from Aker’s usual investments in the oil exploring and marine biotech sectors. Tweeting on Friday, Seetee revealed that it has already purchased 1,170 BTC.
Commenting On The Rationale For Exploring Bitcoin Investments, Aker CEO Øyvind Eriksen Remarked:
“With the launch of Seetee, the Aker Group makes another move into software and fintech. We are very excited about the industrial opportunities that will be unlocked by Bitcoin and blockchain technology, and want to contribute forcefully to that effort.”
Aker is the latest in a growing list of companies around the world investing in Bitcoin in recent months, from business intelligence outfit MicroStrategy to electronic vehicle manufacturer Tesla — and a Canadian restaurant has even converted its cash reserves to BTC.
Bitcoin On The Balance Sheet? Corporate Buying Might Become A Global Trend
According to Arcane, the new corporate buyers appear intent on keeping the cryptocurrencies for the long term “and see further upside potential in bitcoin.”
Bitcoin and ether (ETH, -1.45%) purchases by companies in Scandinavia and Hong Kong are fueling speculation a wave of non-U.S. corporate treasurers might follow MicroStrategy, Tesla and Square into buying cryptocurrencies, according to a new report by the Norwegian analysis firm Arcane Research.
Hong Kong-listed Meitu, a maker of photo-retouching software, said it bought 15,000 ETH and 379 BTC (+2.64%) in open-market transactions last week. Arcane figures the company paid an average $47,230, well below the current market level of around $57,000.
In addition, on Monday Aker, a Norwegian energy engineering company, added 1,170 BTC to its balance sheet, paying approximately $58 million, at an average price of around $49,600.
According to Arcane, the new corporate buyers appear intent on keeping the cryptocurrencies for the long term “and see further upside potential in bitcoin.” MicroStrategy, led by CEO Michael Saylor and based in Virginia, holds about 91,064 BTC purchased over the past three months, now worth about $5 billion. Meanwhile the U.S. electric-vehicle maker Tesla, headed by billionaire Elon Musk, bought about $1.5 billion worth of bitcoin in February..
“The first wave, initiated by MicroStrategy, started in the U.S., but now the trend shows signs of turning global,” Arcane wrote.
With bitcoin firmly in a bull run, quadrupling in price last year and nearly doubling in price already in 2021, the sooner a company got into the market, the better a price it got.
Bitcoin Price Sheds 5% After Oracle Corporation Keeps Quiet On $4B BTC Allocation Rumors
Claims that Oracle would announce a 72,000 Bitcoin buy-in on Wednesday were left unsubstantiated by executives as Bitcoin fell from local highs of $57,300.
Bitcoin (BTC) fell $2,000 overnight on March 11 after United States-based multinational Oracle dispelled rumors that it had bought 72,000 BTC.
Data from Cointelegraph Markets and TradingView showed BTC/USD returning to $55,000 on Thursday after hitting local highs of around $57,00.
The previous day had delivered strong performance across cryptocurrency, with bulls eagerly awaiting a retest of Bitcoin’s all-time highs at $58,300.
While the momentum did much to overcome a final band of resistance in place just below that level, it did not last, as an alleged adoption announcement from Oracle failed to materialize.
Starting in February, claims began to surface that the firm planned to buy a huge amount of Bitcoin in a move that would rival top institutional investors Grayscale and MicroStrategy. Confirmation should have come on Wednesday, social media users added, but an earnings call failed to confirm their suspicions.
In the event, co-founder Larry Ellison did not disclose any Bitcoin-related activity, while signalling that he was bullish on the trading environment for the coming year
“I’m not really ready to disclose our plans as to why I think it’s going to suddenly spike but we expect very, very rapid database growth next year,” he said, quoted by CNBC.
At the time of writing, BTC/USD was continuing to retrace, losing around 2% in an hour and heading towards $54,000.
Reacting, commentators remained unfazed by the anticlimax.
“For those caught in the day to day pricing of Bitcoin, it is a long journey,” entrepreneur Jeff Booth responded:
“The fact that Oracle hasn’t bought ‘yet’ is very bullish and signalling how early it still is.”
Analyst: Amazon market cap could be next for Bitcoin
Taking a longer-term view, one analyst this week described the slowdown in Bitcoin’s bull run at around a $1 trillion market cap as a “back-and-fill process.”
In a tweet, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, argued that once consolidation is over, Bitcoin would rise again — and its next target would be Amazon’s market cap.
“Tesla in Rear View, About $80,000 Bitcoin Eyes Amazon Market Cap — Once Bitcoin’s back-and-fill process around the $1 trillion market cap is complete, we see internet pioneer Amazon.com as a potential next threshold…,” he wrote on Tuesday.
McGlone uploaded a comparative chart highlighting Bitcoin’s low volatility poised to repeat performance from 2017, the year in which BTC/USD grew from $1,000 to just under $20,000.
Philly T-Shirt Company Allocates $1M Of Its Cash Reserves To BTC / ETH
Roughly 30% of the $1 million has already been put toward crypto purchases.
RushOrderTees, a t-shirt printing and embroidering company, intends to buy $1 million worth of crypto with its cash reserves, according to a recent announcement.
“The company has so far purchased $300k in Bitcoin and other cryptocurrencies over the past month and will ramp to $1 million in crypto holdings by the end of April,” a March 12 public statement said. The move from RushOrderTees is another sign of adoption and a normalization of digital asset investing.
RushOrderTees is a custom shirt and apparel manufacturer based in Philadelphia, PA. They accept orders that range from single unit purchases to large-scale apparel runs. The business even touts a partnership with the NBA’s Philadelphia 76ers, according to the company’s website.
Although Bitcoin (BTC) has had its ups and downs over the years, the asset’s price has soared in recent months, breaking its 2017 record price high near $20,000 in December 2020. BTC has continued blazing an upward trail since then, recently flying past $57,000.
“Bitcoin, cryptocurrencies, and blockchain technology offer an exciting glimpse into the future,” Mike Nemeroff, RushOrderTees’ CEO, said in the statement. “This is our opportunity to be on the cutting edge of something that has the power to change global commerce forever.”
A number of other companies have also converted some of their company’s assets to Bitcoin, with more expected to follow. MicroStrategy has put over $2 billion of capital toward the currency, and Tesla bought $1.5 billion worth of BTC in 2021. Square and MassMutual have also bought Bitcoin in recent months.
Nemeroff is no stranger to the crypto space, as the CEO himself has reportedly bought crypto over the years, the statement included.
Forget Buying The Dip, MicroStrategy Buys $15M of Bitcoin As It Nears the All-Time High
This latest purchase brings the firm’s total bitcoin holdings to around 91,326, bought for an average of $24,214 apiece.
Business analytics firm MicroStrategy has made yet another large bitcoin purchase, buying a further $15 million worth.
* MicroStrategy announced Friday it purchased approximately 262 more BTC at an average price per coin of $57,146, just a little over $1,000 away from the cryptocurrency’s all-time high.
* This latest purchase brings the firm’s total bitcoin holdings to around 91,326, bought for an average of $24,214 apiece.
* At the time of writing, this is equal to around $5.1 billion, compared to the approximate $2.21 billion MicroStrategy paid for them.
* The company’s share price has partly recovered from a month-long downturn, which saw it dip as low as $547.40 on March 5.
* MicroStrategy stock was listed at $763 in pre-market trading today and stands at $803.75 at press time.
Bitcoin Hoard Fuels One of World’s Biggest Crypto Fortunes
It’s the latest corporate strategy for companies from Tesla Inc. to Square Inc.: shift a portion of cash reserves into cryptocurrencies as digital assets become more mainstream.
Still, few have gone as far as MicroStrategy Inc. Eight months after its first investment, the software firm has a Bitcoin holding worth more than $5 billion.
Shares of MicroStrategy have rocketed almost 600% since mid-July, boosting the fortune of founder Michael Saylor, a billionaire until an accounting scandal in 2000. The chief executive officer is now worth $3 billion, according to the Bloomberg Billionaires Index, joining the ranks of the world’s richest crypto holders, a list that isn’t definitive since some fortunes can’t be identified or verified.
MicroStrategy’s crypto fixation began soon after the pandemic hit when the firm found it had a cash-flow problem: There was just too much of it. After cutting advertising and axing 400 jobs unsuited to home-work, the Tysons Corner, Virginia-based firm was sitting on a cash pile of $550 million with nowhere to put it. Saylor, 56, turned his attention to Bitcoin.
“People still aren’t sure: Are we crazy or are we not crazy?” Saylor said. “The only way to get economic security is to invest in scarce assets that are not going to be debased by the currency expansion. That is the environment that led us to decide we should consider Bitcoin as a treasury reserve asset.”
Not everyone agrees with the strategy.
“Saylor equated Bitcoin to a bank – that’s just ridiculous,” said Marc Lichtenfeld, chief income strategist at the Oxford Club, a financial-research firm that has no stake in MicroStrategy. “When you put your money in a bank, the value of it doesn’t go up or down by 10% a day.”
Saylor has clashed with investors before. In 2000, a shareholder filed a class-action lawsuit against MicroStrategy, alleging it misled investors over the company’s earnings by booking revenue prematurely to inflate profits.
MicroStrategy agreed to restate its revenue figures and Saylor, once dubbed the wealthiest man in Washington, D.C., with a fortune of $7 billion, lost almost all of it in a matter of weeks after shares fell 95%. He and his fellow executives, without admitting or denying the allegations, paid $11 million to the Securities and Exchange Commission in December 2000, including $1 million in fines.
“It’s made us careful and humble and focused,” Saylor said. “Every scar informs you, and I wouldn’t be who I am without having lived through those experiences.”
Saylor has continued to run the analytics software business he founded in 1989, and has overseen annual revenue streams of around $500 million for the last decade, though sales have dipped in recent years.
Michael Saylor MicroStrategy
Michael Saylor speaks virtually during the Bloomberg Crypto Summit on Feb. 25.
Bitcoin’s price has soared in recent months, hitting a record above $58,000 last month as big investors pile in and the asset class matures.
Saylor shrugs off concern about Bitcoin’s volatility and said crypto critics are behind the curve. He said he’s also put his own money into the digital asset, amassing a personal holding worth more than $1 billion.
“If you go back 10 years, how many people agreed that Facebook, Google, Apple and Amazon would own the world?” he said. “Who were the last people to embrace this? Senior members of the establishment.”
Saylor’s appetite to acquire Bitcoin didn’t stop after the company’s first purchase. When the majority of MicroStrategy’s cash reserves were exhausted, Saylor raised a $650 million corporate bond and used it to buy more.
Saylor said he’d rather issue debt against future cash flow now than save up to buy Bitcoin in five years, when he thinks it’ll be pricier.
In February, the company raised another $1.05 billion in a bonds-for-Bitcoin offering, and on March 5 it announced yet more purchases. On Friday, Saylor tweeted that MicroStrategy bought 262 additional Bitcoins for $15 million in cash, bringing the total to about 91,326. The firm’s shares closed down 2.5% to $784 in New York.
The move has resulted in MicroStrategy becoming a dual-purpose company: part software maker, part Bitcoin investor. While the firm has been transparent about this change in regulatory disclosures, juggling two distinct goals isn’t something that investors are accustomed to.
“If you’re a hedge fund and you want to make that kind of a concentrated bet, you’re entitled to do that,” Lichtenfeld said, but “as a software company to make this kind of a bet is completely irresponsible.”
Saylor said the company has been upfront with investors throughout. When MicroStrategy increased its Bitcoin holding, it held a Dutch auction to give shareholders time to sell their stock.
“Everybody had plenty of time to digest the news and decide whether they’re on or off,” Saylor said.
With all the attention he’s attracted, Saylor wants to do more than just defend a radical investment strategy. He’s become something of a global Bitcoin ambassador in recent months, appearing regularly on crypto podcasts and YouTube shows advocating for digital-asset investments.
“This is a really critical point in human history,” he said. “We’ll build a better world on it once people understand it. We’re still very early. This will be the decade.”
Investview Says It Holds More Than $1M In Crypto On Its Balance Sheet
Investview also reported record net income and sales for the month of February.
Financial technology company Investview said it holds more than $1 million in bitcoin (BTC, -9.83%) and other cryptocurrencies on its balance sheet.
* New Jersey-based Investview recorded estimated net income of $1.9 million and gross revenue of $5.5 million for the month of February.
* Both figures were records, the company announced Monday.
* The Venture Market-traded company’s cryptocurrency holdings in BTC and other digital currencies also surpassed $1 million as of Feb. 28.
* Investview is a financial technology company that provides cryptocurrency mining technology as well as financial education tools, content and research.
Asia’s MicroStrategy? Meitu Drops Another $50M On ETH And BTC
Chinese tech company Meitu has dropped another $50 million on ETh and BTC, taking its total holdings up to $90 million.
Chinese tech company Meitu has announced the investment of a further $50 million into Ether and Bitcoin, taking its net spend on crypto up to roughly $90 million this month.
The Hong Kong and China listed company purchased 386.08 BTC for $21.6 million, and 16,000 ETH for around $28.4 million, on March 17. The most recent announcement follows an initial cryptocurrency investment on March 5, in which the company acquired 15,000 ETH for around $22.1 million and roughly 379 BTC for approximately $17.9 million.
In the latest announcement, the company noted that while cryptocurrency is still in its formative stages, it believes that blockchain technology has the potential to be a disruptive force in existing financial and technology industries:
“The Board believes that the blockchain industry is still in its early stage, analogous to the mobile internet industry in circa 2005. Against this backdrop, the Board believes cryptocurrencies have ample room for appreciation in value.”
The company also cited the growing trend of large institutions such as Tesla and Microstrategy accumulating Bitcoin, and the increasing acceptance for cryptocurrency as a form of payment for goods and services in mainstream society, as reasons for the additional purchase.
Meitu went public in 2016 and is listed in China and Hong Kong. The tech company developed MeituPic, an app that lets users edit and retouch photos that is popular in mainland China, Hong Kong and Taiwan.
Following the announcement of its first investment on March 5, Chinese journalist Wu BlockChain suggested it was: “The first Chinese listed company to buy a large amount of Bitcoin.”.
However, it seems unlikely many more publicly listed Chinese companies will announce large crypto purchases in the near future, as the regulatory environment in the country is highly uncertain. China currently accepts Bitcoin as a virtual commodity, but prohibits trading platforms from engaging in exchanging legal tender for virtual currencies or tokens.
Coinbase Handled Trades And Custody For Meitu’s $90M Crypto Investment
Meitu chief financial officer Gary Ngan said the firm would have faced difficulties acquiring crypto on its own as a listed company.
Crypto exchange Coinbase’s institutional custody platform helped execute the purchase and custodying of roughly $90 million of Bitcoin and Ether for Chinese tech company Meitu.
In a blog from Coinbase today, the United States-based crypto exchange said Meitu used its services to execute up to $90 million worth of crypto transactions “across multiple marketplaces with minimal market impact.” This month, the tech firm purchased 379 Bitcoin (BTC) for roughly $17.9 million and 15,000 Ether (ETH) for $22.1 million, followed by 386.08 BTC for $21.6 million and 16,000 ETH for $28.4 million. Coinbase Custody also provided cold storage for the digital assets, which are now worth more than $94 million.
“Cryptocurrencies are not new but acquiring cryptocurrencies as a listed company, while ensuring the security of the transaction and storage as well as compliance of various regulations and audit requirements, is still like navigating through uncharted waters,” said Meitu chief financial officer Gary Ngan.
Meitu cited institutional players like Tesla and business intelligence firm MicroStrategy acquiring Bitcoin as part of the reason behind its purchase, in addition to the increasing acceptance of crypto as a form of payment for goods and services. The company went public in 2016 and is listed in both Hong Kong and China.
Coinbase has also facilitated MicroStrategy’s multimillion-dollar BTC purchases. The crypto exchange’s institutional custody platform was the primary partner for the firm’s $425-million Bitcoin purchase in September 2020, which was executed over a period of five days.
New Zealand Retirement Fund Reportedly Allocates 5% To Bitcoin
Institutional uptake of BTC is on the rise. KiwiSaver of New Zealand appears to have built up exposure to Bitcoin in October 2020.
KiwiSaver Growth Strategy, a $350 million retirement plan operated by New Zealand Wealth Funds Management, has reportedly allocated 5% of its assets to Bitcoin (BTC), underscoring the steady stream of institutional investors entering the digital asset space.
Bitcoin’s striking similarities to gold were cited as one of the biggest reasons for entering the trade, according to James Grigor, the chief investment officer at New Zealand Funds Management.
“If you are happy to invest in gold, you can’t really discount bitcoin,” he told Stuff, a New Zealand news agency, adding that BTC will be featured in more KiwiSaver products over the next five years.
Grigor explained that his firm purchased Bitcoin for the first time in October when it was valued at $10,000. To execute the trade, New Zealand Fund Management had to change its offer documents to allow for cryptocurrency investments.
Bitcoin’s price peaked north of $61,000 earlier this month, which would give KiwiSaver a 6x return in just five months. Although Bitcoin’s price has moderated over the past week, the pension fund is sitting on hefty BTC profits.
Grigor explained that KiwiSaver is “majority built up through traditional asset classes,” but noted that “other opportunities present themselves.” In the case of Bitcoin, it’s an asset class that could help “give people the best retirement they can get” through its aggressive compounding.
While hedge funds and family offices have been steadily embracing Bitcoin, pension funds are perhaps the slowest to adopt the digital asset class. The growth of institutional onramps could help accelerate the adoption narrative.
In the United States, Grayscale has noted that pension funds are already getting in on digital assets. “The sizes of allocations they are making are growing rapidly as well,” said Michael Sonnenshein, Grayscale’s CEO.
Norwegian Billionaire Ditches Skepticism, Invests In Local Crypto Exchange
Norwegian billionaire investor Øystein Stray Spetalen made a 180° reversal in his opinions about cryptocurrency this month and now part-owns domestic crypto exchange MiraiEx.
Within the same month, Norwegian billionaire investor Øystein Stray Spetalen has gone from dismissing Bitcoin (BTC) as a “nonsense currency” to revealing that he has joined the board of Norway’s top domestic crypto exchange MiraiEx.
Spetalen’s former position was that cryptocurrencies such as Bitcoin should be “immediately” banned by the Norwegian and European authorities due to the destructive effect that mining them has on the environment. In a pre-recorded interview screened at the DNB Invest conference on March 18, he said:
“Bitcoin today consumes as much energy as all of Norway. It is extremely environmentally hostile. The authorities and the EU should ban it immediately. Then you’d cut CO2 emissions considerably […] It’s just nonsense. We’re doing well with the payment systems that are in place today.”
Yet by March 26, in an interview with Norwegian newspaper Finansavisen, Spetalen had changed his tune. “When the facts change, I change,” he said, “I met the MiraiEx founders Thuc and Øyvind the day after the podcast was recorded, early in March, and I realized that I had been wrong.”
Norwegian cryptocurrency exchange and custodian MiraiEx had just raised 5 million kroner ($580,000) in late 2020 to further expand its operations.
Aside from investing in a successful local exchange and joining its board, Spetalen has also apparently now bought Bitcoin, although in a lesser quantity than fellow Norwegian billionaire Kjell Inge Røkke has. Disclosing his unspecified investment in the top cryptocurrency, Spetalen said:
“When I also read that Kjell Inge Røkke had got into Bitcoin, it was quite obvious. I can’t bear to see that Røkke makes money and not me.”
Røkke serves as chairman of the $6 billion industrial holding company Aker ASA, which set up a dedicated unit for investing in projects and companies in the Bitcoin ecosystem in early March of this year. The unit has been initially capitalized with 500 million kroner (~$58.6 million) and plans to keep all its liquid investable assets in Bitcoin.
It has also recently been revealed that the $1 trillion Norwegian Government Pension Fund, also known as the Oil Fund and the world’s largest sovereign wealth fund, indirectly owns almost 600 Bitcoin through its investment holdings.
Chinese Web Firm Meitu Buys $10M More In Bitcoin
The publicly traded app developer has now spent $100 million on bitcoin and ether.
Chinese app developer Meitu said Thursday it purchased 175.6 bitcoin (BTC, +2.72%) for $10 million, bringing its total holdings of the cryptocurrency to over 940 coins.
* The Hong Kong Stock Exchange-listed company has invested $100 million in bitcoin and ether (ETH, +4.41%) positions since adopting a “cryptocurrency investment plan” in early March.
* The company is part of a broader trend of publicly traded firms diversifying their cash treasury with bitcoin during the coronavirus pandemic.
* Notably, Meitu, which also owns ETH, said it is buying crypto to prep for a “foray into the blockchain industry.”
* Meitu held 31,000 ETH and over 940 BTC Thursday. It has invested roughly the same amount in both cryptos, though the ETH position, at nearly $64 million, was worth more at press time.
HSBC Reportedly Blacklists Microstrategy’s Stock For Investing In Bitcoin
The investment banking giant now reportedly classifies MicroStrategy as a “virtual currency product.”
Buying MicroStrategy stock is reportedly no longer possible for HSBC customers on the bank’s online trading platform — HSBC InvestDirect, or HIDC.
According to a supposed message from the bank to its customers, HSBC has directed users that already own MicroStrategy stock not to buy additional shares.
Twitter user Camiam claimed to have received such a message from the banking giant on March 29:
The MSTR blacklisting appears to be part of the bank’s amended user policy prohibiting users from interacting with cryptocurrencies, with an excerpt from the message reading:
“HIDC will not participate in facilitating (buy and/or exchange) product relating to virtual currencies, or products related to or referencing to the performance of virtual currency.”
According to the alleged HSBC communique, MicroStrategy is a virtual currency product, hence the reason for the blacklisting.
MicroStrategy, a business intelligence and software firm, has pioneered Bitcoin (BTC) adoption among publicly listed companies in the United States.
Since first adding Bitcoin to its balance sheet back in August 2020, the Fortune 500 company now holds over 90,000 BTC, currently valued at about $5.26 billion.
The blacklisting of MSTR is only the latest in HSBC’s recent anti-crypto moves. Earlier in the year, the world’s sixth-largest bank also reportedly blocked customers from moving profits from crypto exchanges to their bank accounts.
Despite banning users from buying MicroStrategy stock, reports of similar prohibitions have yet to emerge for other companies with Bitcoin investment interests.
Indeed, companies with significant Bitcoin investments such as Tesla, Hut 8 Mining and Square, to mention a few, are still listed on the HIDC trading catalog.
HSBC becomes the latest bank to react negatively to MicroStrategy’s Bitcoin involvement. Back in December 2020, Citibank downgraded MSTR over the company’s “disproportionate” focus on the largest cryptocurrency by market capitalization.
MicroStrategy’s Bitcoin investment initially seem to trigger a positive run for the company’s stock price, reaching a 21-year high above $1,200 back in early February. MSTR has since struggled and is now almost 50% down from its 2021 peak.
Neither HSBC nor MicroStrategy immediately replied to Cointelegraph’s request for comments.
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