Industry executives are buoyant towards the unexpected purchase of nearly $250 million USD worth of Bitcoin by MicroStrategy. It became the first publicly listed company in the U.S. to purchase bitcoin.
Bitcoin, unlike many other cryptocurrencies, has a fixed supply of 21 million. Its finite supply and resulting scarcity paired with other characteristics such as high censorship resistance and portability bring additional value to Bitcoin in the eye of investors.
According to an official press statement, MicroStrategy purchased 21,454 bitcoins to adopt Bitcoin as the firm’s “primary reserve asset.” That means the company purchased over 0.1% of the entire supply of Bitcoin.
A day after the company announced its purchase, the stock price of MicroStrategy surged 9.12% on the Nasdaq stock exchange. The firm is now valued at over $1.31 billion USD, compared to around $1.2 billion USD before the purchase.
The adoption of Bitcoin by a billion-dollar public firm in the U.S. led industry executives to express optimism toward the digital currency's long-term trajectory.
As I suggested 6 months ago, we are now starting to see businesses owning Bitcoin as a marketable security on their balance sheet. MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset. Just. Getting. Started.
Gabor Gurbacs, director at VanEck, said it is a “big deal” to see Bitcoin intentionally used as hard money and a store of value. He added that companies adopting Bitcoin as a hedge against inflation is particularly optimistic; a use case also addressed by billionaire hedge fund investor Paul Tudor Jones in May.
Publicly traded company MicroStrategy adopts Bitcoin as a treasury reserve asset to hedge against fiat inflation. MicroStrategy allocates $250mm to Bitcoin. This is a big deal and good to see Bitcoin used as intended: hard money/savings instrument.
Dan Tapiero, an investor and the co-founder of 10T Holdings, described MicroStrategy's decision as a “landmark.” He stated that the language MicroStrategy CEO Michael Saylor used was “flawless,” suggesting that other chief financial officers might follow suit. Tapiero explained:
Hard to understate the importance of the action today from Michael Saylor at MicroStrategy on Bitcoin. The language that he uses to describe the reason that he has made the allocation is flawless. Language that other corp CFOs will understand and now consider. Landmark.
Barry Silbert, the CEO of Grayscale, which operates investment vehicles for institutions, said MicroStrategy essentially turned itself into a publicly-traded Bitcoin play. If the price of Bitcoin appreciates in the long-term, the valuation of the firm would likely increase in tandem.
MicroStrategy, a $1.2 billion company, just turned itself into a publicly-traded bitcoin play. Smart.
MicroStrategy’s decision to radically vamp up its exposure to Bitcoin sends a strong message to the corporate space, in a similar way Tudor Jones’ entrance into Bitcoin did three months ago.
Last year, U.S. President Donald Trump reportedly asked Treasury Secretary Steve Mnuchin to “go after Bitcoin,” according to former national security advisor John Bolton. MicroStrategy’s exposure to Bitcoin also demonstrates increasing regulatory clarity regarding Bitcoin in the U.S.