How Bitcoin Hits $100,000 Next: Morgan Stanley Boosts Stake In Microstrategy, Opening The Floodgates

Blockchain, Technology, Smart, Bitcoin, Money

Back on August 11, when bitcoin was still trading just above $10,000, publicly traded business intelligence firm Microstrategy (MSTR) made a transformational announcement: the company said that it has purchased 21,454 bitcoins at an aggregate purchase price of $250 million, a purchase made "pursuant to the two-pronged capital allocation strategy" which - in addition to repurchasing $250 million of its stock in the open market - also called for investing up to $250 million in one or more alternative investments or assets. In doing so, MSTR became the first publicly-traded company to convert a substantial portion of its cash holdings to bitcoin.

“Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders,” said MSTR CEO Michael Saylor.

“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.”

Saylor continued, “MicroStrategy spent months deliberating to determine our capital allocation strategy. Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively. Those macro factors include, among other things, the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty. We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.”

With this announcement, Saylor unleashed two things: a frenzy of public companies - including financial advisors such as the venerable, 169-year-old Mass Mutual  - converting some (or more than just some) of their cash equivalents into bitcoin, and even eschewing stock buybacks instead opting to purchase bitcoin with their excess cash; more importantly Saylor has successfully unlocked tremendous value of MSTR shareholders, whose stock price has exploded alongside the record surge in bitcoin, which nearly quadrupled since August...

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