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MicroStrategy Buys More Bitcoin Doubling Down on Strategy
Earlier this year in August, a NASDAQ traded company called MicroStrategy converted a portion of their balance sheet into Bitcoin. That is, they took their cash reserves, and dumped it in favour of Gold 2.0, Bitcoin. The first purchase was for $250 million worth of bitcoin. Now, MicroStrategy is doubling down, or thereabouts with a second purchase of $175 million. This brings their total reserves of bitcoin to 38,250 or about $425 million equivalent in today’s value. While some say the management team of MicroStrategy has gone awol, others are saying it is a revolutionary business strategy.
Bitcoin Gains Are Inherited By MicroStrategy
The reason why this is an amazing strategy taken by MicroStrategy is because their profits are directly exposed to the gains had by Bitcoin. In terms of timing, they couldn’t have picked a better time. The market sentiment on Bitcoin right now is everything but bearish. The levels of holding is at an all time high, signaling a massive move upwards for Bitcoin in the near future. This ultimately means that the shareholders of MicroStrategy will benefit from Bitcoin indirectly. In terms of what they stand to gain, the answer is a lot. A position of more than $400 million dollars is huge. If Bitcoin is set to rise as much as market analysts think it will, then MicroStrategy shareholders are in for a ride.
Buffett Dumps Banks Stock and Buys Gold Stock
All of this is taking place at a time when legendary investor Warren Buffett has sold his bank stocks and bought Barrick Gold Stock. This came to a surprise to nearly everyone in the investment space as Buffet has a long history of denouncing the utility of investing in gold. In true Buffett fashion, he bought the stock of a gold company, and not gold itself. Still, this signals that even at the highest echelons of the investment community, trust in banks is diminishing. What is worth noting here, is the macro trend. Companies, and lifelong investors are seeing eye to eye on what is happening, but not necessarily what to do about it.
Flock to Save Haven Assets
What is taking place is global economic unrest. There is deep mistrust between the general public and the financial institutions in charge of managing our money. When large economic events take place like the one in 2008, or the one in 2020, there is an uptick in safe haven assets. Bitcoin was not around in 2008, but this time it’s different. Gold has already been proven to be the scarce asset of choice during times of economic uncertainty, but Bitcoin has yet to prove itself in the face of a true economic disaster.
This is what we may be seeing unfold before our eyes. MicroStrategy could just be the tip of the iceberg, and the first to add bitcoin to their balance sheet in a meaningful way. As the Bitcoin detractors flock to gold, the millennials, and tech savvy companies will flock to Bitcoin. If the $250 million dollar bitcoin purchase from MicroStrategy didn’t make you pay attention to Bitcoin, surely doubling down will.
