One indicator of both the legitimacy, and the potential ROI, of an asset is the investment of that asset by institutions. Say, for example, there is a small company that claims to produce new transistors at a cheaper price for a higher level of efficiency. A ‘big name’ investment group decides to buy up some of that company’s stock. Others follow suit. Suddenly that small company is worth big.
If you had bought shares of that company before the ‘legit’ actors stepped in and spent their money on it, many people would question your actions. But suddenly, now that the company is bigtime, its considered an obvious choice. What was, before, considered reckless, now has become obvious.
The same rule applies to Bitcoin. Yesterday, Microstrategy, joined in the group of institional investors in Bitcoin. Microstrategy is the largest independent publicly-traded business intelligence company. What the hell is business intelligence? Abbreviated as BI, it is simply the practice of compiling data, looking at that data, and making a financial decision based on that data.
BI in today’s world means examining the fundamentals, compiling vast amounts of data and online analytics, then making a best-guess on where the market will go.
Compared to warfare, BI is essentially the financial version of intelligence agencies.
And, the largest one, Microstrategy, just bought $250,000,000 worth of BTC. Per their press release:
“MicroStrategy® Incorporated (Nasdaq: MSTR), 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.”
Their reasoning for purchasing this much BTC, according to them, is part of a longterm strategy of ROI for their shareholders. The press release sums up a lot of what BTC holders have known well for quite some time.
““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. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. 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 words here are pretty inspiring.
- Dependable store of value.
- An attractive investment asset.
- More long-term appreciation potential than holding cash.
- A significant addition to the global financial system.
- A legitimate investment asset.
This is quite the far step from the days of 2015 when BTC was seen as a payment method reserve only for nerds, drug dealers and scum. The company elaborates on their rational, citing among other things, the pandemic, unseen levels of government bailouts (99% of which go straight to the pockets of the rich, NOT working-class people), and the overall levels of instability in the world.
Essentially, they identify BTC as a form a digital gold, as opposed to depreciating assets of fiat. BTC is a hedge against inflation, which, as we are seeing in the current pandemic, continues to move towards absurd levels.
The entire press release is worth reading. I don’t think I’ve ever said that about a press release before. If anything, this is reassuring to those of us who continue to invest their fiat into BTC. It could also continue to create a wave of further institutional investment in to BTC as they seek a safe-haven from uncertain and unstable fiat markets.