MicroStrategy has been the star of institutional investment in Bitcoin this year, and it looks set to continue as other companies embrace the business opportunities offered by cryptocurrencies.
Michael saylorCEO microstrategy, the company specialized in business intelligence, announced that the company completed an offering of $0,75 million of convertible senior notes with a rate of 650% per annum, maturing in 2025. The offering was open to qualified institutional buyers, and will allow the company to raise funds to finance its upcoming investment in Bitcoin (BTC).
According to the company's estimates, The net proceeds from the sale of these bonds will be approximately $634,9 million., which will be invested in Bitcoin in accordance with the company's Treasury Reserve Policy. To date, MicroStrategy, the company that debuted as an institutional investor in Bitcoin this year, has a reserve of 40.824 BTC, with an investment of more than 775 million dollars in this cryptocurrency. Its CEO, Saylor, publicly announced in mid-August that Bitcoin became the company's main reserve asset, thanks to its great potential as a safe and reliable store of value, and for being a very attractive investment asset with a wide potential for long-term appreciation.
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Appetite for more bitcoins, many more
Bitcoin is becoming an increasingly scarce commodity, and therefore, much more valued. MicroStrategy believes that this cryptocurrency, as an investment asset, will be a safe haven against inflation, so since August it has been investing large amounts of its reserve, or cash hoard, in this cryptocurrency. The company's first investment was for a total of 250 million dollars, 50% of its cash reserve; the second investment was worth 175 million dollars, and the third and most recent, worth 50 million. All of these investments were made in the last 3 months.
However, MicroStrategy’s conviction for Bitcoin does not stop there. The company’s recent announcement of its $650 million convertible bond offering shows the company’s hunger to acquire more bitcoins, as well as reflecting the importance that this cryptocurrency is acquiring among institutional investors, who are increasingly accepting it as a valuable financial player on a global level.
Another of the companies that recently announced an investment in Bitcoin was Massachusetts Mutual Life Insurance Co., with a total of $100 million invested in this cryptocurrency. The company, which recently joined the Bitcoin and digital assets ecosystem, stated that Bitcoin is a solid form of money and “asymptotically non-printable with an uncorrelated risk premium”, and which is also a “cornerstone” in its new business strategy; one that it has been quietly building alongside NYDIG, the leading provider of Bitcoin solutions for institutions, banks and private clients, seeking to create better business and trading opportunities for its clients.
Building Bitcoin's success
While institutional participation is essential for Bitcoin to truly become a financial player of global importance, retail investors and everyday users are also an important part of the growth, development and success of this cryptocurrency. Recently, we have seen several professional investors, skeptical of Bitcoin, slightly change their perspectives towards this cryptocurrency as an investment asset, and several other investors publicly announce their holdings in the leading cryptocurrency of the digital markets.
A unique opportunity at present
En este sentido, Shaan Puri, product manager of the streaming platform Twitch, has been the most recent to announce that it keeps part of its capital invested in Bitcoin, citing of course, the cryptocurrency's potential for revaluation in the medium and long term. Puri noted on his Twitter account that he recently moved 25% of his assets to Bitcoin, although he did not give details on how much money this was.
Likewise, Puri stated that, in his opinion, investing now in Bitcoin is a unique opportunity to get ahead of the wave of institutional capital that will arrive to the cryptocurrency in the next 2 years, and assured that the arrival of this asset to its historical maximum of $20.000 USD will not be like the last time, seen at the end of 2017, due to the institutional participation that exists today, and that was not present in the past.
On the other hand, the actions of regulators and legislators within this industry have also played an essential part in the development of Bitcoin, as noted by the general counsel of the enterprise software firm R3, Jacob Farber, during his participation in the virtual conference LaBitConf 2020Farber highlighted that the regulations established in the cryptocurrency industry today have favored institutional participation, and that as these are clearly defined, they will continue to favor and attract more potential investors to this industry.
Need for management of potential risks
Also, in the sense of institutional adoption, Farber stressed that the crypto space must expect new and stricter regulations, which mitigate some of the potential risks that exist around this industry.
As the crypto space grows and develops, so does the need to manage risks more efficiently, and prevent a scenario like the one seen in 2017, with the boom in cryptocurrencies. ICO, take place again. The regulations, which require the exchanges or cryptocurrency exchanges, financial services companies with digital assets, and other participants in the digital industry, ensuring legitimate handling of funds and the protection of users and consumers will allow more investors and companies to approach Bitcoin, and cryptocurrencies in general, as potential assets, Farber said, although he also noted that overly strict regulations can become unnecessary obstacles and limitations for some.
At the time of this writing, the price of Bitcoin (BTC) on the markets is $19.295 USD, with a market capitalization of $358 billion.
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