Business intelligence company MicroStrategy has bet its future on Bitcoin and has amassed over 190,000 Bitcoins to date with an average purchase price of $31,224.
This massive bet on cryptocurrencies now looks incredibly prescient, with MicroStrategy posting paper profits of over $4 billion as Bitcoin recovers toward an all-time high near $69,000.
TLDR
- MicroStrategy has amassed over 190,000 Bitcoins at an average price of $31,224 per Bitcoin and is currently valued at over $10 billion.
- For MicroStrategy to be included in the S&P 500 index, its market capitalization would need to increase by $3.7 billion to $15.8 billion.
- When added to the S&P 500, MicroStrategy would represent about 0.01% of the index, potentially giving millions of investors exposure to Bitcoin.
- MicroStrategy transforms itself into a “Bitcoin development company” to emphasize its long-term Bitcoin commitment.
- MicroStrategy’s Bitcoin bets generated over $4 billion in paper profits as Bitcoin prices rose toward all-time highs.
MicroStrategy began purchasing Bitcoin in mid-2020 and has continued to purchase more coins each quarter since, making it the largest corporate holder of Bitcoin.
The company believes that Bitcoin is superior to cash in terms of preserving purchasing power against inflation over the long term. This belief is embodied by MicroStrategy, which recently shifted its business model around cryptocurrencies, calling itself “the world’s first Bitcoin development company.”
The total value of MicroStrategy’s Bitcoin constellation now exceeds $10 billion, validating its decision to allocate billions of dollars of its financial reserves to Bitcoin.
As Bitcoin gains more mainstream traction as a legitimate asset class and inflation hedge, MicroStrategy and its vocal Bitcoin evangelist, CEO Michael Saylor, are taking a prominent place in the cryptocurrency space.
And that exposure could skyrocket even further if MicroStrategy is added to the coveted S&P 500 stock market index. To be included in the S&P 500, MicroStrategy must further increase its market capitalization from $3.7 billion to $15.8 billion and meet other eligibility requirements related to trading liquidity and consistent profitability.
Saylor discovered a flaw in infinite money.
• Buy #Bitcoin
• MSTR rises
• Pay off more debt
• MSTR rises
• Sale of personal holdings.
• MSTR rises
• Issuance of additional shares.
• MSTR rises
• Join the S&P 500
• MSTR risesThis is the playbook of the century. ????
— ₿itcoin Therapist (@TheBTCTherapist) February 15, 2024
As difficult as it may be, if MicroStrategy succeeds in breaking into the S&P 500, it will immediately gain passive exposure in front of millions of investors.
With an expected index weight of around 0.01%, MicroStrategy’s inclusion could result in upwards of $12 billion of automatic inflows into the stock. This starts a positive feedback loop that drives the stock price higher and allocates more capital to MicroStrategy to purchase additional Bitcoin.
In fact, MicroStrategy’s S&P 500 ambitions could see Bitcoin infiltrate just about every portfolio with exposure to U.S. stocks, from pension funds to 401(k)s.
That’s 0.01% of the $41.9 trillion market capitalization of the S&P 500, or $12 billion. So if MicroStrategy punches above its weight, institutional investors of all types could indirectly end up holding MicroStrategy’s Bitcoin.
Considering that MicroStrategy initially paid only $5.9 billion to accumulate 190,000 Bitcoins, a much larger passive allocation included in the S&P 500 could significantly increase the company’s treasury.
As Bitcoin heads into another bull market, MicroStrategy continues to live up to its conviction that Bitcoin will become the world’s digital gold. As the price of Bitcoin rises, the $4 billion bounty to date is expected to continue to swell.