Bitcoin, the biggest cryptocurrency network by market capitalization and coin price, has been moving in recent weeks in a tight space just below a big milestone. That marker is the 20,000 USD per bitcoin token and now, investors are wondering when will be the moment when this barrier is broken. However, a recent piece of information from the corporate domain shows that a new enforcing element is slowly setting itself up. That element is the announcement that MicroStrategy, a big US-based tech company, is preparing a huge purchase of bitcoin. So far, it has already bought into bitcoin on a massive scale and through a very public process, just like the payment company Square.
Both companies now hold bitcoin in their corporate treasuries, along with all other financial assets and instruments. However, MicroStrategy is preparing to double its investment. That would see the same business selling its convertible bonds to purchase up to 400 million USD worth of crypto, more precisely BTC. The news came across a lot of jubilation and support in the crypto community. Besides that, it is also yet another showcase of the strength of the present price rally, as well as a mooring element for the platform from which the price will find the next jump off moment.
The community around cryptocurrency and bitcoin was set alight when MicroStrategy decided to purchase bitcoin worth 425 million USD last summer. Back then, the news was both unexpected and came with something that so far rarely appeared in the institutional domain – a strong backing of the cryptocurrency ecosystem. The CEO of the company, Michael Saylor, said that the decision came after the company decided to invest a massive amount of money into something that will be around even 100 years from now.
That is a narrative that is rarely seen in the traditional financial domain, even in companies that are close to things like esports, social media, and other cutting-edge technological developments. Even for those who are supposedly bitcoin-friendly, the notion of “riding it while it lasts” might appear from time to time. In this case, the same CEO clearly backed the border space where these investments are taking place.
Success as its Main Promotion
There is another aspect of the whole institutional investment that the company took on. This is the very fact that the investment so far has been an incredible success. Since the moment the company bought its BTC tokens, their fiat value has increased over 100 percent. The total holding of the company is somewhere around 800 million USD. That in itself is the best possible promotion that this decision can have in the rest of the corporate environment.
In other words, success is the element that will get other businesses to consider their options of investing in the cryptocurrency domain. This applies to MicroStrategy as well. Because of that, the company is now looking to allocate even more money into the crypto main, more precisely somewhere around 425 million USD. At the current prices, that would mean that the company really holds somewhere around 21,000 BTC tokens as a part of their portfolio.
Unsurprising, investors and traders are already labeling this decision as another big element that will enforce the coming price increase of the bitcoin network. Presently, the price of the BTC token is stuck just below its record levels, with the potential for a bigger drop towards something like the 15,000 USD range. This remains a risk in any bull run and this one is no different.
However, others are saying that the long-term price increase potential only keeps getting bigger and bigger. Most are pointing out that the cash injection from this company is not simply an addition to the market capitalization but also an injection to the confidence levels big businesses can have in this network. That confidence intron represents another factor in the general bullish potential this digital currency has in the eyes of potential investors.
While the money is pouring into the crypto scene, some big questions still remain related to this ongoing process. First of all, there is the problem of regulation. While some companies are putting millions of USD into the cryptocurrency domain, others are wondering how this will reflect on their ability and potential to pay taxes.
Besides, in a world that is growing more and more skeptical towards all manner of financial transaction that is not fully transparent and government-regulated, these purchases could be seen as a way of circumventing some government regulations. This could end up being a huge PR problem for any business that might get up in the limelight of the news media. In some ways, it does not even matter if the company in question actually broke some law. The negative attention they get could be reason enough for other similar ventures to simply say no to any possibility of cryptocurrency investment.
Profits over Risks
The Regulatory fears and worries are real, but at the same time, they are apparently not stopping companies from bringing money into crypto. Instead, this trend seems to be only growing in strength and longevity. Because of this even, the most outlandish projections about the potential of the price of bitcoin now seem more and more possible. While the current movement of the price has found some level of stability, the end of the year promises to be a very dynamic period.
During that time, many analysts and industry experts are certain the new record will be broken, but this time, by a much larger margin than the one which took place several weeks ago. If that does come to fruition, it can easily be expected that alternative coins will follow the same trajectory and that even bigger institutional investment deals will be made in early 2021. The general individual investment would also follow suit, enforcing the cycle further. From that point, it is truly anyone’s guess where the fully developed and biggest bitcoin bull run to date would actually and.