The weakening US dollar and global unrest is making the case for the resiliency of Bitcoin.
Ironically, Bitcoin came into existence during the last great recession of 2007-2009 and now during the COVID recepression Bitcoin is making its presence known.
MicroStrategy, a publicly traded company, has announced that it has bought over $250 Million worth of Bitcoin to use as its primary reserve.
This is a testament to the belief in resiliency of the Bitcoin’s value.
According to the official announcement “ the largest independent publicly-traded business intelligence company, today announced that it has purchased 21,454 bitcoins at an aggregate purchase price of $250 million, inclusive of fees and expenses. The purchase of Bitcoin cryptocurrency was made pursuant to the two-pronged capital allocation strategy previously announced by the company when it released its second quarter 2020 financial results on July 28, 2020.”
Michael Slayer, CEO of MicroStrategy noted that acquiring bitcoin is part of the strategy to maximize long-term value for its shareholders.
According to Mr. Slayer, the decision to invest in Bitcoin was rather arduous and is a result of months of research and strategizing the next move.
According to him “ MicroStrategy spent months deliberating to determine our capital allocation strategy. Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively. Those macro factors include, 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. 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.”
Pandora box within a pandora box
Investment in Bitcoin by a publicly traded company and a rather transparent announcement of the decision as ‘no-brainer’ strategy is a big boost to Bitcoin.
Now the companies wanting to secure their reserves and possibly maximise the long-term value to their shareholders will be forced to look into Bitcoin.
Even a small percentage allocation of funds by other companies into Bitcoin could result in a hefty demand on the ‘limited’ bitcoin supply, moreso with the recent halving.
Growing demand for Bitcoin from all corners
This latest demand for bitcoin from a publicly traded company as a reserve adds more buy pressure on Bitcoin.
According to Teeka Tiwari, Millennials are expected to inherit over $68 Trillion over the coming years and many of them will invest in Bitcoin.
Now, if companies start diverting some small percentage of their reserve allocation to Bitcoin it could only heat up the demand for Bitcoin.
Here are the places where we are seeing demand for Bitcoin come:
- Millennials (who form 35% of the workforce today)
- Inheritances in trillions and expectation of certain percentage of it to go into Bitcoin
- Institutions like Bakkt, Fidelity, PayPal, Square, etc., offering Bitcoin services
- Public companies, like Microstrategy, who are looking to invest in Bitcoin as a hedge
- Exchanges who use Bitcoin as the main trading pair
- Retail investors who want to own at least a fraction of this scarce asset
We believe that the proclamations of Bitcoin reaching $100,000 or more in next 2 years could become reality sooner than we anticipated.
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