MicroStrategy is one of the world’s largest business intelligence service providers. The company recently decided to convert its primary asset base to Bitcoin, which signaled renewed institutional interest in the asset. Fresh off the firm’s benefits from this decision, it appears that its chief executive is becoming more of a Bitcoin enthusiast.
A Crypto Asset Network and Crypto Application Networks
On Sunday, Michael Saylor, MicroStrategy’s CEO, took to Twitter to explain what he believed was Bitcoin’s most significant difference from other digital assets. Posting a chart from analytics site Bitcoin Dominance, Saylor explained that Bitcoin’s dominance has grown from 71 percent in December 2017 to about 94 percent today.
When considering network dominance in the crypto industry, I find it clarifying to separate crypto-asset networks like #Bitcoin from crypto-application networks like Ethereum & stablecoins. Bitcoin dominance has advanced from a low of 71.05% on December 20, 2017 to 93.57% today. pic.twitter.com/03cbWVyoLY
— Michael Saylor (@michael_saylor) September 20, 2020
The CEO pointed out that he believes Bitcoin is a crypto asset network, while other cryptocurrencies like Ether and some top stablecoins function more as crypto application networks.
While Saylor isn’t mistaken about Bitcoin’s dominance, he appears to be overstating the numbers a bit. Figures from bitcoin Dominance notably don’t include stablecoins and Initial Coin Offerings (ICOs). CoinMarketCap, the industry’s top aggregator, considers all and pegged Bitcoin’s dominance at 58.28 percent for this week. It’s also worth noting that Ether has witnessed an increase in value this year, thanks in no small part to the boom in the decentralized finance (DeFi) space.
MicroStrategy’s Bitcoin Play
Saylor and his company have so far put their faith in Bitcoin to work. MicroStrategy shocked the world in August when it announced that Bitcoin would be its primary reserve asset. Per a press release, Saylor explained that Bitcoin is a dependable store of value and an attractive investment asset with a better long-term view than fiat currency.
The company clarified that it had purchased 21,454 BTC for $250 million. MicroStrategy’s Bitcoin investment was a significant pointer to Bitcoin enthusiasts’ views that the asset saw a great deal of interest from institutional investors. Such investors, which include large companies and large-net-worth individuals, have propped up the market since the turn of the year.
The firm immediately saw gains as a result. Most notably, its stock price shot up 5.7 percent in less than a week of the reserve asset change. It eventually doubled down, explaining in a disclosure form with the United States Securities and Exchange Commission (SEC) that it could purchase more units of the asset in the coming weeks.
In its disclosure form, MicroStrategy explained that it would base any future purchases on its cash evaluations and demand for fiat currency.
“As a result of this new Policy, the Company’s holdings of bitcoin may increase beyond the $250 million investment that the Company disclosed on August 11, 2020,” the disclosure form added.
MicroStrategy’s investment has also brought Bitcoin in contact with the Norwegian Government Pension Fund. The fund is known by many as the world’s largest sovereign wealth fund, with over $1 trillion in assets — including 1.4 percent of all global shares and stocks.
According to an Arcane Research report from last week, the Norwegian fund has a 1.51 percent stake in MicroStrategy. This stake puts its Bitcoin ownership at about 577.6 BTC — worth about $6.3 million.