MicroStrategy, a business intelligence software company, announced on Tuesday that it purchased 21,454 Bitcoin worth $250 million as a part of its ‘capital allocation strategy’.
Listed on NASDAQ with ticker MSTR, the company is expecting a “reasonable hedge against inflation” with this cryptocurrency investment and is also hoping for a good return in the future.
“Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively,” MicroStrategy CEO Michael J. Saylor said in a statement.
Betting on a Highly Volatile Asset
Founded in 1989, the Virginia-based company has a total market capitalization of $1.2 billion and posted a profit of $34 million for last year. With these numbers, an investment of $250 million in digital assets seems to be a bold move, given the volatile nature of Bitcoin.
Bitcoin achieved a peak of around $20,000 in December 2017 but hit a bottom of around $3,500 after that in a two-year-long bear. The digital asset market is showing signs of another bull run, and Bitcoin is aggressively testing the $12,000 resistance mark. However, in the last 24 hours, the crypto lost 4.6 percent of its value plummeting to just below $11,300.
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Notably, after the announcement, Mocrostrategy’s publicly-listed share jumped over 9 percent in the last trading session.
“This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” Saylor added.
“MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
He also pointed out the weakening fiats, due to factors like COVID-19 pandemic, global quantitative easing measures, political and other economic uncertainties, but is bullish on Bitcoin due to its decentralized model.
Though other companies including Overstock are also investing in digital assets, MicroStrategy’s sudden jump into Bitcoin and with such a large amount of capital was unexpected.