Digital Assets: Microstrategy May Hike Bitcoin Holdings Beyond $250M
The company, which set markets aflutter with its previous announcement of a $250 million investment in bitcoin, is set to boost that amount.
Microstrategy (NASDAQ: MSTR) said in an 8-K filing with the SEC on September 11 that it had revised its Treasury Reserve Policy. Under the new Policy, the company’s treasury reserve assets would comprise Cash Assets (in excess of working capital) and Bitcoin.
Significantly, the company notified that bitcoin would serve “as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business for Cash Assets, including future potential share repurchase activity.”
The company also said that as a result of this new Policy, its “holdings of bitcoin may increase beyond the $250 million investment that the Company disclosed on August 11, 2020.” (NEWSBTC)
Is Microstrategy doubling down?
The company has already invested in 21,454 BTC at $250 million. The news of the investment sent Microstrategy’s stock sharply higher in August. It has since outperformed the Nasdaq composite index, a bellwether for tech companies, according to Coin Telegraph.
Clearly, the company is more bullish on BTC than it was in August. At the time, its investment rationale included the following statement:
Bitcoin is as good as digital gold. It is “harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”
Since then, macroeconomic data, particularly the weakness in the U.S. dollar, appears to be supportive of an advance in both bitcoin and gold.
“Since March and the Fed’s decision not only to provide a deluge of dollars for its own economy through massive and open-ended purchases of bonds and other securities but to provide liquidity swaps with 14 central banks – supplying them with US dollars – the world has been drowning in US dollars,” says Stephen Bartholomeusz in the Sydney Morning Herald.
The unrelenting supply of dollars, the monetary stimulus in the U.S., and ultra-low U.S. interest rates have combined to knock the U.S. dollar lower by 9.3% against the basket of its major trading partners’ currencies since March 19.
Technically, too, the U.S. dollar looks top-heavy, according to a Reuters report. It cited the appearance of an ominous, multi-year double top – a chart pattern that often preceded a decline in the currency.
Note that a weak dollar makes it likelier that BTC will move higher, and hence Microstrategy’s move to boost its holdings if needed.
Related Story: Nasdaq-listed Company Microstrategy Bets $250M on Bitcoin