The opinion Echo: Will Microstrategy become a Bitcoin fund?
Microstrategy may run out of cash, but this does not prevent the company from buying more Bitcoin. The Nasdaq company now plans to buy further BTCs worth USD 400 million with special debt instruments. But slowly the first critics of the strategy are beginning to speak out. The opinion poll-ECHO.
Gold and Bitcoin use similar investment narratives. After all, the precious metal is traditionally considered a good store of value. In times of crisis or periods of high inflation, investors increasingly buy gold on Bitcoin Circuitas a hedge against the uncertainties of the future. Readers of BTC-ECHO should not have been unaware that the metal has become a serious competitor in the digital world: Bitcoin.
Meanwhile, this realisation is also penetrating the traditional financial sector. Recently, JP Morgan analyst Nikolaos Panigirtzoglou, for example, has reiterated the case for Bitcoin.
The adoption of Bitcoin by institutional investors has only just begun. Meanwhile, the diffusion of gold by institutional investors is already very advanced,
the analyst told Bloomberg. According to the analyst, the gold story has already been told, while Bitcoin is gaining momentum. If investors were to diversify even small parts of their gold portfolio into BTC, the precious metal could get into real trouble.
Microstrategy strikes again
Michael Saylor can’t get his neck out. The charismatic CEO of the business intelligence company Microstrategy has already made several confident approaches to the Bitcoin market. According to bitcointreasuries.org, the company’s balance sheet total currently includes over 40,000 BTC. However, digital gold worth USD 720 million does not seem to be too long in coming.
As Microstrategy announced on 7 December, the company plans to issue so-called senior convertible notes, i.e. interest-bearing notes that can be converted into shares. Microstrategy will then use the proceeds of the issue, worth 400 million US dollars, to buy – three guesses – more Bitcoin.
In addition to the Bitcoin community, the shareholders are particularly pleased about this. Since the announcement of the first major Bitcoin shopping tour, Microstrategy shares have risen by no less than 116 percent.
But not everyone agrees with the risky behaviour of the Nasdaq company. The Citi Group is already warning investors about the stock.
The issuance of new debt to finance Bitcoin purchases is aggressive and could be a deal-breaker for software investors who fear that they now own a riskier asset manager,
the bank writes in a memo available to The Block. In other words, Citi Bank warns of a restructuring of Microstrategy into a kind of Bitcoin fund. This is not reprehensible per se. Investors just need to know exactly what they are investing in.
The much-cited Bitcoin liquidity crisis
I keep repeating this, but a #Bitcoin liquidity crisis is playing out in front of our eyes.#Bitcoin removed from Exchanges is continuing to drop.
Another $700 million removed from exchanges this last week, more people are stacking. pic.twitter.com/yhLCQyqPuX
– Danny Scott (@CoinCornerDanny) December 10, 2020
I repeat myself, but a Bitcoin liquidity crisis is unfolding before our very eyes. More and more BTCs are being withdrawn from Exchanges. A further $700 million (USD) was withdrawn from the exchanges last week and more and more people are hoarding.
You hear it again and again: Bitcoin is running out. Not only are major investors such as Microstrategy or Grayscale buying massive amounts of BTC. The retail sector is apparently also driving the shortage of BTC supply. For example, the amount of coins currently held by investors on accounts of Bitcoin exchanges such as Binance has been steadily decreasing since the beginning of this year.