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- What – Microstrategy, a Fortune 500 company, has been reaping the rewards of its Bitcoin investment.
- Why – once again as the leading cryptocurrency surged to a 10-month high of $30,163.
- What Next – Microstrategy first invested in Bitcoin during Q2 2020, when the price of BTC was around $10,000.
MicroStrategy reported to the Securities and Exchange Commission (SEC) in its April 5 filing that the platform and its subsidiaries had purchased roughly 1,045 Bitcoin for around $29.3 million between March 24 and April 4.
Over the past two years, the firm purchased BTCs at several intervals, accumulating to a total of 140,000 BTC. At the current value of BTC’s $29,803, the platform’s total BTCs worth is around $4.17 billion.
Microstrategy co-founder Michael Saylor introduced Bitcoin as a treasury hedging asset over the US dollar, and the company has been holding BTC personally and on its balance sheet. Saylor has also encouraged several other public companies, such as Tesla and SpaceX, to accumulate BTC on their balance sheets.
Although Microstrategy’s BTC investment appeared to be lucrative throughout the 2021 bull market, when BTC’s price reached $65,000 in April 2021, the prolonged crypto winter in 2022 resulted in the BTC price crashing by over 70%, resulting in losses for Microstrategy investment.
Many Critics of the firm’s investment strategy were quick to criticize it due to its losses during the bear market in 2022. Since the start of this year, 2023, BTC has shown resilience, with a 55% increase in the first quarter. For the past three months, the BTC price has consecutively closed above the previous month’s high, hinting at the bullish market indicator and an upcoming bull run.
In 2023, BTC has outperformed most traditional stocks and bonds and has even overcome losses endured from the crypto contagions inflicted by FTX and Terra-Luna saga. With BTC’s ever-growing adoption, public companies such as Microstrategy and Tesla highlight the increasing importance of cryptocurrencies in the global financial ecosystem.
While Microstrategy’s investment in BTC is unconventional for a business intelligence firm, the company’s CEO, Michael Saylor, is a vocal advocate of Bitcoin and believes it can potentially replace fiat currency in the long term.
Saylor introduced Bitcoin as a treasury hedging asset over the US dollar, which is subject to inflation and depreciation. By holding BTC on its balance sheet, Microstrategy can preserve its treasury against the devaluation of fiat currency and earn higher profits on its investment.
Despite the criticism Microstrategy’s BTC investment has attracted from a few critical analysts, who view it as a risky bet that could harm the firm’s financial health, Saylor defends the strategy. He argues that BTC has appreciated over time and that the company’s long-term investment strategy reduces short-term price fluctuations.
Microstrategy’s BTC investment has inspired many other public enterprises to invest in BTC to their balance sheets, including Square, Marathon Digital Holdings, and Tesla.
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