Cryptocurrency and MicroStrategy: Going Further into Information on Its Massive Gamble on Bitcoin.
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Cryptocurrency and MicroStrategy: A Deep Dive into the Business’ Big Bet on Bitcoin
In the business and financial realm few firms have been as vocal about their adoption of cryptocurrency as the firm in question here, MicroStrategy. BI has been around since 2020 and one of the more daring and polarizing moves the business intelligence firm has taken has been to gamble on Bitcoin.
This strategy attracted attention and it also attracted criticism as well. Today we examine how this bet has unfolded for MicroStrategy and the company’s continued exposure to cryptocurrencies and what the future holds.
What is MicroStrategy?
MicroStrategy is leveraging information technology to deliver BI solutions to customers, coupled with mobile software applications and managed cloud services. It is particularly best famed for its capability in enabling companies to carry out assessments on available data and consequently come up with good decisions.
The Company was establish in 1989 by Michael Saylor and Sanju Bansal and has expand over the year and is now a NASDAQ listed company with the symbol MSTR.
Even though MicroStrategy is mostly a software company, its most significant narrative of late is not a software one but crypto. But Bitcoin is now at the core of its financial plan, so nobody seriously questions its presumptions.
MicroStrategy’s Bitcoin Voyage
MicroStrategy as a corporation invested in Bitcoin in August of 2020. The company made its first big investment in digital currency and bought 21,454 bitcoins for approximately $250 million.
Many people were rather wondering at this move, as it was a clear indication that Cognizant was seeking to move beyond its roots as a business-software and -services company. MicroStrategy’s CEO, Michael Saylor, thought that Bitcoin is preferable to money in terms of holding assets due to growing inflation and unpredictability.
After that initial stock, MicroStrategy has followed it up by purchasing even more BTC. According to their balance sheet, by December 2024, the company will possesses more than 180 bitcoins value in billions of current dollars. This makes MicroStrategy one of the largest publicly traded corporate holders of Bitcoin in the world.
Why did MicroStrategy go for Bitcoin as its investment venture?
Another Company decides on Bitcoin investments is closely related to Michael Saylor’s believe in Bitcoin. Saylor has publicly come out to reveal his opinion that he reasonably considers Bitcoin as digital gold. That is why he thinks the number of Bitcoins can be absolutely confined to 21 million, which give it a high inflation-proof and currency protection rate. This belief has now become very core of MicroStrategy operational mechanism.
In the interviews, Saylor said that the company was holding large basically, large volumes of cash which to him was depreciating through inflation. He was of the view that rather money, Bitcoin had the potential to preserve the company’s resources. That was also attractive to Saylor due to the fact that Bitcoin is not under the regulation of any government or central bank which he deemed fit for use during turmoil.
MicroStrategy Finance
MicroStrategy has experienced both the benefits and drawbacks of buying bitcoins in its attempt to diversify its business. On a bright note, through price hikes of Bitcoin in 2020 and 2021, increases in value on the company’s Bitcoin investments occurred. For instance, prices for bitcoins skyrocketed to over $60,000 in 2021.
At that time, MicroStrategy’s inventory in Bitcoin was several billion dollars more valuable than the corporation’s original investment.
Yet this volatility has been one of the biggest drawbacks of Bitcoin. Bitcoin price in 2022 lowered to below $20,000, which is depressed from before and its price has been fluctuating. Consequently, the overall value of Bitcoins on MicroStrategy’s balance reduced. However, these have been fluctuating and the company has continued to hold on the Bitcoin, showing long-time belief in the currency.
The company’s MicroStrategy has also seen its shares change fluctuation in tandem with Bitcoin. Loyal bitcoin users that think the digital currency has a lot of potential have seen to it that the stock went up during Bitcoin upsurges. However, as we have seen when Bitcoin’s price came down in the recent past, MicroStrategy’s stock value was not spared either.
The Impact That MicroStrategy Has Caused in the Crypto Market
Needless to say the BTC community has taken note of the fact that MicroStrategy is pouring lots of money into Bitcoin. It has made the company well-known in the Bitcoin community, and Saylor has turned into a Bitcoin Evangelist.
His endorsement of the crypto currency has made other establishments and business venture to embrace the promotion of Bitcoin as an asset investment products portfolio.
For instance, the electric car maker Tesla in early 2021 made a purchase of $1.5 billion worth of BTC. While Tesla eventually decided to sell some of its Bitcoin, it was another indication of how more conventional enterprises were entering the market.
The firm has also employed its treasuries in Bitcoin to pressure other companies into doing the same. Saylor especially has time and time again had something positive to say about bitcoin as a value storage tool, and the company has also gone as far as offering its knowledge in the area to other interested parties through seminars and reading materials.
MicroStrategy’s Future and Bitcoin
The fate and future of MicroStrategy’s Bitcoin investment, forward, still hangs in the future’s balance. Bitcoin is still quite unsteady in price and few can predict the future of cryptocurrencies today.
There are other analysts who think that there is potential that Bitcoin price can further experience an increase due to increased usage from the business and institutions.
Some are more pessimistic about it due to the nature of the asset: it is quite dangerous to own a product that can become a subject of scandal in a day.
And thus for MicroStrategy, its Bitcoin has been bet on its longevity to invest, which is unlikely to change any time soon. The company is still buying Bitcoin, and this has even used debt to buy more of the cryptocurrency assets. Saylor has been very vocal about the idea that Bitcoin is an important piece for the company’s future plans at MicroStrategy.
But, of course, the disadvantages of such a strategy are also obvious in this case. There is, however, the disadvantage if Bitcoin’s rate goes down – MicroStrategy may be in big trouble. However, the management of the company still feels assured with this decision owing to the following risks;