Bitcoin News Roundup for Aug. 13, 2020 – CoinDesk
One Of The Biggest Ever Bets On Bitcoin, Worth A Massive $250 Million, Is Already Paying Off
Bitcoin, after a long period in the wilderness, has begun to find its place both on Wall Street and with non-financial companies.
The bitcoin price, up 6% on this time last year, has recently surged after trading sideways since early May—topping $11,000 per bitcoin for the first time since last September as nervous investors brace for a bout of inflation due to huge government spending and cash creation designed to offset the economic damage wrought by the coronavirus pandemic.
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Some investors have recently turned to bitcoin in an attempt to offset the inflation they see coming … [+] as a result of coronavirus pandemic spending.
“Our investment in bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders,” MicroStrategy chief executive Michael Saylor said in a statement, adding the company believes bitcoin “is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
Bitcoin is “superior to cash,” according to Saylor, pointing to “macro factors” including the coronavirus pandemic, global quantitative easing measures, political and economic uncertainty, and bitcoin’s technical and qualitative properties.
The MicroStrategy stock price added over 10% to its $1.3 billion market capitalization following the bitcoin purchase announcement, increasing the company’s market value by over $100 million as investors cheered the move that somewhat ties MicroStrategy’s valuation to the price of bitcoin.
The bitcoin price was, however, broadly unmoved by the news MicroStrategy had snapped up 21,000 of the total possible supply of 21 million bitcoin—though that didn’t stop many bitcoin traders and analysts from arguing it is bullish for bitcoin over the long-term.
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The bitcoin price has climbed so far this year, erasing its March coronavirus-crash losses and … [+] putting bitcoin relatively flat for the year.
“[MicroStrategy’s bitcoin purchase] serves as further confirmation of the institutional investment thesis of betting on bitcoin as a hedge to stimulus printing as well as global political and economic uncertainty,” Micah Erstling, trader at crypto market maker GSR, said via email.
“The longer-term bull case for bitcoin remains strong, and will continue to build as developments like these continue to emerge, alongside what seems to be an ongoing free flow of fiscal stimulus.”
Others in the bitcoin and cryptocurrency community argued MicroStrategy’s bet on bitcoin will have additional benefits, potentially resulting in other companies following in its footsteps.
“MicroStrategy talked about finding a long-term store of value, but companies that adopt bitcoin will discover other major benefits,” Nick Neuman, the chief executive of Colorado-based provider of bitcoin security services, Casa, said via email.
“It can simplify their treasury operations, giving them more control—and more speed—when moving large amounts of money compared to our outdated, legacy payment rails.”
Author: Billy Bambrough
BlackRock, Vanguard, Indirectly Hold Bitcoin Via MicroStrategy Investment
Earlier this week Bitcoin (BTC) bulls and crypto investors were thrilled by the news that MicroStrategy, a Nasdaq-listed business intelligence company worth $1.2 billion, had formally adopted Bitcoin as its primary reserve asset by purchasing 21,454 BTC ($250 million).
This led the majority of top crypto analysts and industry folk to post uber-bullish statements on Twitter and for many this confirmed their belief that Bitcoin is in the early stages of a bull market.
While this news is exciting and a strong sign that institutional adoption of cryptocurrency continues to occur, there is even better news. BlackRock, the $89 billion investment giant, is the biggest shareholder of MicroStrategy.
According to data from CNN Business, BlackRock Fund Advisors hold a 15.24% stake in MicroStrategy. This means MicroStrategy’s recent purchase gives BlackRock indirect exposure to Bitcoin, the company has essentially turned itself into a “publicly-traded Bitcoin play.”
MicroStrategy has BlackRock as its biggest stakeholder. Source: CNN Business
In an official statement, MicroStrategy said it was adopting Bitcoin as a “primary treasury reserve asset.” and CEO Michael J. Saylor acknowledged that Bitcoin could potentially be superior to 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 purchase becomes even more interesting when considering the previous comments both Saylor and BlackRock strategists made about Bitcoin.
In February 2018 conversation with CNBC, BlackRock’s global chief investment strategist Richard Turnill said:
“We see cryptocurrencies potentially becoming more widely used in the future as the markets mature. Yet for now, we believe they should only be considered by those who can stomach potentially complete losses.”
At the time, Turnill laid out some factors that could help buoy Bitcoin in the long-term. He also emphasized that a global regulatory framework on cryptocurrencies could potentially aid the growth of crypto assets.
Since then, the Financial Action Task Force (FATF) under the G7 established a unified cryptocurrency regulatory framework. Most major countries across Asia, Europe, and the U.S. also adopted clearer policies regarding cryptocurrencies.
Saylor, who this week expressed his optimism about the long-term trajectory of Bitcoin had an even more critical perspective in 2013 when he said:
“Bitcoin’s days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.”
Companies that previously rejected Bitcoin are now beginning to warm up to cryptocurrencies. For example, JPMorgan reportedly accepted Bitcoin exchanges Coinbase and Gemini as clients in May.
Changpeng Zhao, the CEO of Binance, said:
“Smart publicly listed company buys $250,000,000 worth of bitcoin, as a safe haven asset. Stimulus money flowing from Wall Street into bitcoin. Are you in front or behind them?”
This shifting trend in the cryptocurrency industry highlights the increasing maturity of Bitcoin and its growth as a store of value.