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Carbon chain value (ID: cc-value)
, reprinted by Odaily with authorization.
Original Author: Biraajmaan Tamuly
Compiled by the carbon chain value original team
On August 11, MicroStrategy announced that it has invested 250 million US dollars in Bitcoin, and since then it has blown the clarion call for institutional investors to enter the Bitcoin market;
On September 8, MicroStrategy announced that it would invest another US$175 million in Bitcoin, bringing the company’s investment in Bitcoin to US$425 million;
On December 21, MicroStrategy announced the purchase of approximately 29,646 bitcoins for $650 million in cash (including fees and expenses).
Many people have questioned why this Nasdaq-listed business intelligence software industry giant has been buying Bitcoin again and again in the recent period. At first, everyone thought that MicroStrategy’s purchase of Bitcoin might be a In order to bring incremental benefits to the company, but if you look at the companys performance in the stock market, you will find that MicroStrategys purchase of Bitcoin is a good deal deal!
MicroStrategy invests more and more money in Bitcoin
According to a report released by Ecoinometrics, MicroStrategy may be trying to raise another $400 million to invest in Bitcoin. What does this mean from a fundamental perspective? In fact, by investing in Bitcoin, MicroStrategy will not only consider the profitability and asset preservation capabilities of their cash reserves, but their stock prices will also rise with the investment in Bitcoin! As shown in the chart below (source: Google Stock), it shows MicroStrategys stock price trend from August 2020 to the present, and August is the time when the company first disclosed the purchase of Bitcoin,
Next, let’s take another look at another analytical chart from Ecoinometrics, as shown below:
This chart shows the growth trend of Bitcoin, MicroStrategy and the Nasdaq stock market in 2020. You will find that since MicroStrategy bought Bitcoin, its stock price trend is almost consistent with the upward trend of Bitcoin, showing Parabolic rise state.
Before investing in Bitcoin, that is, from 2019 to August 2020, the stock price trend of MicroStrategy was basically similar to that of the Nasdaq stock market, and the correlation between the two could reach 51%.
After investing in Bitcoin, MicroStrategys stock price trend began to soar, and the correlation with the market trend of the Nasdaq stock market seemed to disappear! Soon, the correlation between MicroStrategy and the Nasdaq stock market flipped. At the time of writing, the correlation between MicroStrategys stock price and Bitcoin was 52%, while the correlation with the Nasdaq stock market was only 21%.
This situation may seem abnormal, but it is actually reasonable, because according to the evaluation of MicroStrategy and its chief executive Michael Saylor, the entire market is still in the early accumulation phase of Bitcoin, and many other institutional investors have been paying attention Bitcoin’s strong value storage capability, for example: Tesla founder Elon Musk recently released a Bitcoin cartoon on his personal Twitter, in which the protagonist suffers from the low productivity of the current world. At this time, someone suggested that you can try Try bitcoin. Michael Saylor responded: If you want to generate $100 billion in returns for shareholders, please convert the dollars on Teslas balance sheet into Bitcoin, and then other companies on the SP 500 will follow your lead Over time, assets will reach $1 trillion. Then Elon Musk questioned whether Bitcoin could support such a large transaction volume, and SBF, the founder of the cryptocurrency derivatives exchange FTX, responded: “Bitcoin supports such a large transaction that FTX or other OTC platforms are happy to assist in executing this transaction. Basically, this transaction will have some market influence, but we may process 25 billion US dollars in transactions per day. That means $100 billion could take a week or so to complete.
At least from the perspective of MicroStrategys investment in Bitcoin, they have achieved a win-win situation in both the currency market and the stock market!
Is it safe for institutions to invest heavily in Bitcoin?
