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  • Why We’re Dramatically Underestimating MicroStrategy’s $250m Bitcoin Purchase

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    Why We’re Dramatically Underestimating MicroStrategy’s $250m Bitcoin Purchase

    Earlier this week, we discovered MicroStrategy had bought 21,245 bitcoins at an aggregate price of $250m.

    And as staggering and as bullish as the purchase is, prominent economist and Bitcoin bull, Preston Pysh believes we’re dramatically underestimating MicroStrategy’s Bitcoin play.

    $250m Public Money Invested In Bitcoin Is Extremely Bullish

    ‘This is a way bigger thing than most realize,’ said Pysh, who was speaking on The BreakDown podcast yesterday.

    MicroStrategy Bitcoin purchase extremely bullish

    Pysh, who is extremely bullish on Bitcoin’s future, was typically forthright while explaining the reverberations he expects to emanate from MicroStrategy’s bold move.

    MicroStrategy surprised everybody with the size of its Bitcoin purchase. A public company whose balance sheet was $916m at the end of 2019, $509 million of it stockholders’ equity.

    It’s a huge percentage of the books for a public company to buy Bitcoin.

    Not a Bitcoin institutional fund, but actual bitcoins: 21,425 of them.

    Wall Street Giants Behind The Bitcoin Purchase

    After the announcement, Pysh did some research on MicroStrategy:

    Founded by MIT graduate and author of The Mobile Wave: How Mobile Intelligence Will Change Everything Michael Saylor, who has remained as the CEO, Microstrategy is a relatively small company based in Virginia, US.

    However, the thing that really excited Pysh was that the business intelligence firm is actually 97% institutionally owned.

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    The biggest owners being Wall Street behemoths BlackRock, Vanguard and JPMorgan. And what a statement that is.

    For Wall Street giants like these to be so bold in agreeing to invest half the company’s equity and buy Bitcoin is so bullish it’s taken even the most bullish of Bitcoiners by surprise.

    BlackRock has $7.43 trillion assets under management (AUM), Vanguard has $6.2 trillion, and JPMorgan $2.39 trillion AUM, and they were all involved in sanctioning the purchase to make Bitcoin the principal holding in MicroStrategy’s treasury reserve.

    Three of Wall Streets biggest companies all at the table agreeing to buy $250m in bitcoins using public money. These three giants have a front seat view, and the purchase has made every global institution stand up and take notice.

    Bitcoin is a Dependable Store of Value and an Attractive Investment asset

    On the purchase, MicroStrategy’s Michael CEO Saylor said, ‘Bitcoin is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.’

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    ‘The economic situation 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.’

    This is typical sentiment of most people in the Bitcoin space, but to come from the CEO of a public company, and be sanctioned from Wall Street giants it tells the world exactly what they think of Bitcoin.

    And they’re thinking now is the time to buy Bitcoin.

    MicroStrategy to 10X in a Year

    Pysh, host of The Investor’s Podcast, said the effect of MicroStrategy’s Bitcoin purchase would be very dramatic, and make the relatively small public company a ‘major player.’

    ‘You’re gonna see the price explode…,’ said Pysh. ‘Next quarter there’ll be no change on the top line or bottom line but you’re gonna see the stock price explode, and the same will happen the next quarter.’

    ‘I expect the market cap on this company to 10x within a year. They’re gonna go from a $1.3 billion company to a $10-13 billion company in a year.’

    MicroStrategy – A Case Study for Wall Street

    MicroStartegy’s Bitcoin purchase is a case study for Wall Street and the financial world at large.

    It’s not like they took everyone by surprise because some of the world’s largest financial institutions were part of the decision making.

    Most people have been expecting institutional announcements of around 1-2% AUM for sometime now. But MicroStrategy have made an absolute statement buying over 21,000 bitcoins.

    Everyone is taking notice, and if Preston Pysh’s belief bears fruition, companies on the sidelines will watch their competitor grow from a small to big player in the matter of 12 months.

    But I expect this is only the beginning. With the printing press on overdrive, and all those new trillions needing to find somewhere, who wouldn’t follow BlackRock, Vanguard and JPMorgan and buy bitcoins?

    Author: Tommy Limpitlaw

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