MicroStrategy’s (MSTR) stock rose 11.3 percent over the same period and has climbed alongside the company’s decision to move 75 percent of its cash reserves into leading cryptocurrency bitcoin. Since August, when the company made its first BTC investment, MicroStrategy’s stock has ballooned by more than 35%. Over the same period, Apple’s stock has been flat while Microsoft has declined by 6.4%.
BeInCrypto previously reported that CEO Michael Saylor described his company’s erstwhile cash reserves as a “$500 million melting ice cube.” Following his decision to move $425 million into bitcoin, he then praised bitcoin as a “harder asset than gold.’
MicroStrategy Sitting Pretty
In August and September, Saylor’s company made two purchases of 21,454 BTC and 16,796 BTC at price levels of $10,951 and $10,461, respectively. Bitcoin’s current price stands at $13,965, which means that these purchases are up 27.5 percent and 33.5 percent, respectively. Cumulatively, MicroStrategy’s $425 million purchase is now worth roughly $534 million.
MicroStrategy’s action poses an interesting challenge to companies like Apple, for instance, whose Q3 2020 cash reserves amounted to $193.81 billion, most of it under management by Braeburn Capital. With bitcoin’s current total market cap standing at just under $250 billion, even a 5 percent conversion of this cash pile into bitcoin would move the market needle.
Raoul Pal On MicroStrategy’s Bitcoin Play
Former Goldman Sachs hedge fund manager Raoul Pal is bullish on MicroStrategy’s bitcoin investment. Speaking on the Real Vision Finance platform recently, Pal predicted that tech giants like Microsoft and Apple will follow Saylor’s lead by adding bitcoin holdings to their portfolios inside five years.
Pal both referenced and endorsed Saylor’s viewpoint, describing bitcoin as an “incredible” reserve asset that cannot be killed, controlled or inflated due to its decentralization and fixed supply. He said:
“In this world of a distributed ledger which is owned by everybody and owned by nobody, there’s almost no chance except you shut down the internet entirely to get rid of bitcoin — it’s impossible. It’s like a cockroach in finance; something you can never kill. That is its power. That is what makes it so incredible. That’s what makes it such a great reserve asset.”