Bitcoin, as an asset, has a pedigree that is unmatched. The coin registered the biggest returns for the past decade, and was unmatched across the planet. Investing in Bitcoin at the start of the last decade would have made many people, businesses, and enterprises very rich, but not many had that much foresight.
Now, with that accolade behind it, and continued growth, normalisation, and legitimation, Bitcoin is still being viewed sceptically by major institutional and traditional investors. There is a lot of fear and a bit of the unknown about this alternative asset for many to stomach.
However, things could be finally set to change as news from American business intelligence firm MicroStrategy, regarded as the biggest independent, publicly traded business intelligence firm in the world, has shown that Bitcoin is hot property.
The company has made a significant purchase of over 21000 Bitcoin worth over $250 million US Dollars as part of an alternative assets acquisition strategy. The purchase of 21,454 Bitcoin forms part of the company’s latest capital allocation strategy following its financial results for the second quarter of 2020. Having met financial obligations to shareholders from profits, the company carried through with plans to invest around $250 mln into an alternative asset class.
This is not only a big move from the company’s side of things, it is a bold move from the cryptocurrency space. This hads Bitcoin a real legitimacy as an alternative investment class — something that it has been aspiring to for some time now.
The start of the snowball
Bitcoin has been courting big businesses and institutional investors for some time. A good example of this is the pursuit of a Bitcoin ETF that came from the Winklevoss Twins back in 2016. This never came to be, but other traditional products did take off.
There has been a massive boom in the growth of Bitcoin derivatives trading with not only the cryptocurrency providers offering services, but also major players like CME, and more recently, Baakt.
The products are designed to offer Bitcoin to institutional traders in a way that they are familiar with in order to experience the difference that this new asset class offers, such as big volatility and a totally digital nature.
Even simple Bitcoin investing, which MicroStrategy is now doing, has been on the cards for institutional investors with Greyscale offering their Bitcoin Trust for many years now, and succeeding with it.
More so, Bitcoin has been given more greenlights by names that matter this year when Paul Tudor Jones states that he was backing Bitocin in his own portfolio, and backing it to be the best performer.
The hedge fund legend said he would only put around 2 percent in his portfolio — but this looks to have sparked something.
Bright future for Bitcoin
All of this institutional investment in Bitcoin is coming from a place of forward thinking, this is further outlined by MicroStrategy’s CEO.
CEO Michael Saylor said that the investment is looking to maximize long-term value for its shareholders.
“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 said.