Nasdaq-listed MicroStrategy Corporation (MSTR) continues to buy hundreds of millions of dollars in bitcoin (BTC), which saw the company’s share price rise more than 9% on September 16.
MSTR shares are restored to pre-determined levels after the purchase of Bitcoin
MicroStrategy first announced that it bought bitcoins on August 11, after which the share price rose more than 10%.
Now the MSTR price has risen in a similar way again after yesterday’s confirmation that it has doubled since the adoption of the “Bitcoin standard”, after buying over 38,000 BTC worth $ 425 million at an average price of $ 11,111.
“We just realized we were sitting on top of a $ 500 million melting ice cube,” CEO Michael Sailor told Coindesk.
“This is not speculation or hedging. Adopting the Bitcoin standard was a deliberate business strategy. ”
The computer scientist, a software engineer under a pseudonym, said other companies will follow MicroStrategy. He wrote:
MicroStrategy is based on the #bitcoin standard. Other companies will follow. Finally, the central banks will follow (Switzerland is probably the first). The new gold standard for the digital age. A neutral store with value will create more controls and balances for governments. ”
What is the risk with MicroStrategy’s Bitcoin hoarding strategy?
According to Joe Weisental, host of What Did You Miss? At Bloomberg, MicroStrategy’s revenues have declined steadily since 2013.
The company needed new ways to increase the ability to buy and buy bitcoins, and soon BTC became a major equity, one of the main strategies.
Refugee funds such as gold and real estate are often seen as inflation headlines. They are like insurance instead of investments, and provide balance in a portfolio.
Bitcoin has the potential to achieve both; It can act as a hedge against inflation and potentially better than many asset classes over time.
Grayscale CEO Barry Silbert said the acquisition could be the worst or smartest CEO decision ever.
MicroStrategy takes a huge risk to secure such a large BTC stake. However, if BTC rises significantly in the long run, it could be a major catalyst for equities. Silbert said:
It will go down in history as one of the smartest or worst CEO decisions ever made. Case studies and books will be written on this topic. In any case, it took enormous courage for the CEO of a public company, and I thank him for his courage. ”
Do not hold MSTR shares as ETFs
A problematic feeling for MSTR shares is what some see as a trapdoor for exchange traded funds (ETFs).
Although the company has significant access to bitcoin, Compound Finance general counsel Jake Chervinsky said such a vulnerability does not exist. He also noted that if the company continues to buy more bitcoins, the US Securities and Exchange Commission (SEC) may begin to find out. He said:
“No, there are no loopholes in federal securities laws that allow listed companies to convert to Bitcoin ETFs without SEC approval. The more MSTR buys $ bitcoin, the more likely the SEC will start asking questions that @ NASdaq will not answer. “On it.”