So, here's the scoop:
MicroStrategy has decided to make Bitcoin its main treasury reserve asset.
Check this out:
This announcement was made public through Coindesk:
MicroStrategy just dropped $250M on Bitcoin, claiming it's "better than cash."
Now, my take:
This is huge. A publicly traded company is putting half of its $500 million surplus cash pile into Bitcoin, choosing to ditch worthless cash that keeps losing value due to inflation. They're all in on Bitcoin, which they see as a stronger, hard asset, like digital gold. This is super bullish news. It feels like Bitcoin is stepping into a new chapter as a top-notch store of value.
Here are some tweets reacting to this:
Gabor Gurbacs' take:
https://twitter.com/gaborgurbacs/status/1293153751549784064
PlanB's perspective:
https://twitter.com/100trillionUSD/status/1293174076299673600?s=20
Barry Silbert, CEO of GrayScale:
https://twitter.com/barrysilbert/status/1293162827478335488?s=20
The WSJ even caught wind of this, weeks later:
"Cash is trash, so why not throw $425 million on Bitcoin?"
They made a second purchase here:
https://twitter.com/michael_saylor/status/1305850568531947520?s=20
And a third buy here:
https://twitter.com/michael_saylor/status/1334990791496884224?s=20
Here's a quick summary of their buys: they're not far from the ATH, yet they're still sitting on a 60% profit!
[LINK]
Also, a little about Michael Saylor:
He's been featured in an interview with Antony Pompliano on his podcast.
Is there any indication anywhere that they bought actual tangible Bitcoin? Lots of people started to froth when Paul Tudor Jones made his announcement but of course it was nothing but futures.
"MicroStrategy...announced that it has purchased 21,454 bitcoins..."
Sounds like it to me, but who knows?
Institutional interest in BTC futures is nothing? Seems like a pretty big deal in terms of legitimacy, if nothing else. It would be silly to assume institutional traders are all going to jump balls deep into actual BTC custody.
It's the difference between just another play on their legacy dashboard and delving deeper but I totally get why they'd stick with what they know if that old stager makes it available to them. Obviously in this case with such a huge portion of their funds it's a proper macho move.
I agree. MicroStrategy isn't a huge company in terms of market cap ($1.3 billion), but the fact that they'd buy a huge amount of bitcoin to hold as its "treasury reserve asset" (I don't know exactly what that means) is indeed big news for bitcoin. What I'm wondering is what their shareholders are going to think about it, and I'm putting MSTR on my stock watchlist. I'd never heard of them before, but it looks like they've been around for years and their stock has done pretty well over the past decade.
And lol, reading the summary of what the company does, I can barely understand a word of it:
**Quote from TD Ameritrade**
Maybe. It would be far more bullish had the company been Microsoft or Amazon. And I'm not sure how big a story this is overall. You and I certainly find it to be incredible, but that doesn't mean the market is going to react to it at all. We'll see.
The article says they bought a specific number of bitcoin, so I'd infer that it's actual bitcoin and not a derivative.
I wonder who is handling the custody of this for them. That was probably the hardest part of the whole thing for them to work out.
I figure it could be Greyscale, or one of the exchanges (Gemini? Kraken? Coinbase?). Could be Bakkt? Of course they could do it themselves, but that is a fairly serious security undertaking when $250MM is the amount of value.
Looking at the news I do not see that detail.
If it's actual coin then one of your list no doubt. I'd love to sit in on the pitch these custody places give them. A lot of people will come to them knowing nothing and nothing about their specific company either. There's no possibility of any of it being insured either.
Yep, that custody question is a good one. Maybe BitGo as another option. The press statement they recently came up with looked as if they know what they are doing so I assume they will come up with a name soon. It will also benefit the custody provider big time. But maybe it´s just a random Metamask wallet haha
Interesting, I missed that bit, do you have any source for that?
Every firm has cash, this cash is managed by a Treasury department, who is in charge of maximising the return on this cash (think about a firm based in Switzerland, where you actually pay money for your cash balance in your saving account) investing it in low risk bonds (t-bills) Short money market operations or FX operations to minimise the exposure to different currencies..
Every firm has a "reference" currency, mostly based on the location of headquarters (AAPL has inflows in many different currencies, but ultimately the balance sheet are in USD, so they try to manage all their cash in USD terms). Well, apparently, MicroStrategy choose to elect Bitcoin as their "base" treasury asset. This means, probably, all the resto f their business is going to depreciate massively against their cash balance. (hopefully...).
Regarding the shareholders part, that was part of a pre-announced part of capital allocation, approved by the shareholders (they had 500 mios reserves, half of those in BTC, half i shares buyback).
Another description:
TLDR: Microstrategy builds software that organise data collected all over the firm, so that dumb manager can take smart decision based on some tables they see. Competitor : SAP, I don't know if you are familiar with them.
IT's a start, of course other might follow. Maybe Facebook will do the same with their Libra, one day.
I strongly doubt that. Those are exchanges, and their business is the exchange of Cryptoassets, not the custody. I expect the elected venue for the custody to be BitGo, who is the leader in the custody sector. Please note that BitGo is insured on their funds, as some of the exchanges (Gemini and Binance) are, with varying degree of security.
This is only my tough, I didn't read anything about that, for now.
There always has to be someone to open the path. Like the first guy who bught pizza with bitcoin.
Now, if a company is thinking of trading fiat for bitcoin to have as a reserve of value, it's not going to be the first. Let's hope MicroStrategy is the first of many.
I do agree, but don't forget that yesterday they also performed a 250 Millions buyback of their shares. This is not peanuts given their total Market Cap.
I'd be vary of such orgs coming into btc trading... Sorta defeats the purpose of it surviving as a currency and only as a trading mechanism; which is not what it should primarily be.
Wary you mean? The bitcoin network actually needs companies like MicroStrategy and even bigger ones to join the network, I don't see any cons in it, it appreciates adoption and encourages other establishments to also come in. Btc's purpose btw isn't to survive as a currency, and I don't think it matters at all what people or establishments do with btc when they buy it. That being said, if bitcoin is to serve as more of a currency like you said, more adoption is of course needed and that can only come with more of this kind of news.
Nice U-turn, Micheal:
https://twitter.com/michael_saylor/status/413478389329428480
https://twitter.com/michael_saylor/status/1293141856700768257
From declaring Bitcoin a doomed asset to embracing it buying the 0.1% or the total supply. Better than being stubbornly wrong.
^^ These guys are a publicly listed company so they need to be as transparent as possible.
Or else their investors would get their pitchforks out in protest if they sniff even one bit of shady dealing with any of their forecasts for the future of their assets.
Biggest intelligence firm in the world?
Well if they have the brains then BTC is a safe bet to gamble on if its just going to end up as successful as online gambling.
Good for that company. This will no doubt pay off handsomely for them. Any company or organization brave/smart enough to get into Bitcoin will be extremely well rewarded for it.
I believe Harvard and Yale bought up several hundred million dollars of Bitcoin back in 2018, so add MicroStrategy to the list of big organizations that have hundreds of millions of dollars of Bitcoin as an investment. I wonder if there are any more. In another 5 or 10 years that list will hopefully grow to dozens.
There is no "this is what bitcoin should be". Bitcoin is what it is. If someone wants to spend it, they can spend it. If someone wants to use it for sending money across borders, they can do that. If someone wants to trade it, they can trade it. If someone wants to hold it as a long term investment, they can do that. Hell, if someone wants to use Bitcoin in Ethereum smart contracts for DeFi or whatever they can tie it up in that, and that's fine. All of these things are fine to do. There is no one right way to use bitcoin. And all uses add to Bitcoin's relevancy in society and its adoption, so they are all good.
Largely, I agree with you thecodebear in terms of bitcoin users figuring out whether bitcoin provides some kind of use case for them and then, if it does, then using bitcoin in the way that they believe is suitable to their needs. If bitcoin does not provide certain use cases for certain "would be users" that they would like to have in bitcoin, then surely they can attempt to get those kinds of features or use cases added to bitcoin, but in the end, bitcoin is not going to give any shits, if someone wishes that they could use bitcoin to buy a latte and not pay any fees for that transaction.. and do it with zero confirmations and to have their transactions immediate.
Of course, in accordance with Gresham's law, most people are going to use whatever payment processing service that is either the least valuable in terms of holding value or the least costly to use, and maybe some day, BTC will supplant a bunch of the currently existing payment processors too because value will likely continue to gravitate into BTC.. but seems more likely that a variety of payment processors are going to continue to exist for some time, and perhaps payment processing on bitcoin or pegged to bitcoin is going to happen on some kind of second or third or fourth layer rather than directly on the BTC blockchain.. even though right now, some transactions can go for relatively low fees, that might not always be the case.. absent some surprise developments that push bitcoin to change in the on-chain payment processing direction.
Surely, bitcoin provides a powerful option that was not available earlier (before bitcoin was invented and implemented), in terms of a sound money that is kind of similar to gold, but better than gold in almost all ways (except the physical tangibility aspect of gold - which is also a cost of gold), and recognizing that bitcoin is better than gold in almost all money ways seems to be a better way of thinking about what bitcoin currently is and what bitcoin has to offer in terms of bitcoin being more scarce, more portable, more divisible, more verifiable, and just something that is capable of being individually held and managed, either without a third party or just way less expensive to manage in terms of either how to hold, how to manage or not having to get permission regarding sending or receiving it... which give powerful options to bitcoin in and of themselves, even if I have not described all of the possibilities that a better kind of Gold has, with the passage of time, it seems quite likely that more and more people are going to recognize a variety of use cases around bitcoin which will continue to cause value to gravitate towards and into bitcoin, which likely was part of the incentive that Microstrategy had in terms of their decision to take a decently-sized stake in bitcoin at supra $10k prices (seems to have been around $11,653-ish per BTC that they would have paid).