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.
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.
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.’
‘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
Bitcoin FAQs
How do you make money with Bitcoin?
There are many ways to make money with Bitcoin. The most obvious way is to mine Bitcoin. Bitcoin mining is the process of verifying transactions, and helping to secure the Bitcoin network. Bitcoin miners are rewarded with bitcoins for their work.
Who is the CEO of Bitcoin?
There is no Bitcoin CEO. There is no central authority that directs or controls Bitcoin. It was created by a pseudonymous programmer Satoshi Nakamoto, but he gave it up to the community, and now all decisions are made by the hundreds of thousands of miners and nodes who work for the Bitcoin network.
Why should I buy Bitcoin?
Bitcoin is a peer-to-peer money that nobody can manipulate. It’s all set in the Bitcoin codebase which is secured by hundreds of thousands of computers all around the world. Bitcoins can be sent by anybody and no third party is need to verify the transactions, and nobody can stop Bitcoins being sent.
