MicroStrategy Buys $10 Million Bitcoin

MicroStrategy bought the dip, with the publicly traded US company just announcing today:

“On January 22, 2021, MicroStrategy Incorporated (the “Company”) announced that it had purchased approximately 314 bitcoins for $10.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $31,808 per bitcoin, inclusive of fees and expenses.

As of January 22, 2021, the Company holds approximately 70,784 bitcoins that were acquired at an aggregate purchase price of $1.135 billion and an average purchase price of approximately $16,035 per bitcoin, inclusive of fees and expenses.”

Michael Saylor, MicroStrategy’s founder, has a vision of diversifying their profits fiat holdings into bitcoin.

Publicly traded companies hold trillions in reserves, just like many hold funds in a savings accounts. The mass dollar devaluation means they’re all losing money.

So to hedge, MicroStrategy has bought bitcoin, opening a debate on whether other companies should follow.

Old media says no of course, citing bitcoin’s volatility. That’s why there should be some sort of distinction between on demand treasury reservers and more long term holdings.

The latter should be diversified according to numerous studies who have concluded bitcoin does not correlate with any asset.

They have also found it can act as a hedge with some studying concluding portfolios that include bitcoin increase risk adjusted returns.

Many treasurers therefore are probably looking at their assets wondering whether it is smart to put it all on one dollar basket, especially as the dollar is expected to keep on falling in value which can be really felt by companies that engage in international trade, like Apple which is paid in devaluing dollars by US consumers but pays their employees in China in strengthening Yuan.

Something bitcoin can potentially fix because it is a globally traded asset, with global fiat fluctuations usually reflected in its price.

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