3 months ago
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Business intelligence firm MicroStrategy has staked its future on bitcoin, accumulating over 190,000 bitcoins to date at an average purchase price of $31,224.
This gargantuan bet on the cryptocurrency now looks incredibly prescient, with MicroStrategy sitting on paper profits of over $4 billion as bitcoin mounts a recovery toward its all-time high near $69,000.
TLDR
- MicroStrategy has accumulated over 190,000 bitcoins at an average price of $31,224 per bitcoin, now worth over $10 billion
- For MicroStrategy to be eligible for inclusion in the S&P 500 index, its market cap would need to rise by another $3.7 billion to $15.8 billion
- If added to the S&P 500, MicroStrategy would make up about 0.01% of the index, potentially exposing millions of investors to bitcoin
- MicroStrategy transitioning to becoming a “bitcoin development company”, underscoring its long-term bitcoin commitment
- MicroStrategy’s bitcoin bet has resulted in paper profits of over $4 billion so far as bitcoin’s price creeps toward its all-time high
MicroStrategy kicked off its bitcoin buying spree in mid-2020 and has continually purchased more coins each quarter since, making it the largest corporate holder of bitcoin.
The company views bitcoin as superior to cash for preserving purchasing power against inflation over the long term. This conviction is embodied by MicroStrategy recently labeling itself as the “world’s first bitcoin development company” as it pivots its business model around the cryptocurrency.
The total value of MicroStrategy’s bitcoin horde has now surpassed $10 billion, vindicating its decision to allocate billions of dollars of its treasury reserves into bitcoin.
With bitcoin gaining more mainstream traction as a legitimate asset class and inflation hedge, MicroStrategy and its vocal Bitcoin evangelist of a CEO Michael Saylor are positioned prominently in the cryptosphere.
And this exposure could rocket further if MicroStrategy is added to the coveted S&P 500 stock market index. To qualify for S&P 500 inclusion, MicroStrategy would need to boost its market capitalization by another $3.7 billion to $15.8 billion, on top of meeting other eligibility requirements around trading liquidity and consistent profitability.
Saylor found the infinite money glitch:
• Buy #Bitcoin
• MSTR goes up
• Take out more debt
• MSTR goes up
• Sell personal holdings
• MSTR goes up
• Issue more stock
• MSTR goes up
• Join the S&P 500
• MSTR goes up
This is the playbook of the century. ????
— The ₿itcoin Therapist (@TheBTCTherapist) February 15, 2024
While challenging, if MicroStrategy does succeed in landing a spot in the S&P 500, it would instantly gain passive exposure in front of millions of investors.
With an index weighting projected around 0.01%, MicroStrategy’s inclusion could drive over $12 billion of automatic inflows into its stock. This would set off a positive feedback loop of increasing share prices and more capital allocated to MicroStrategy for additional bitcoin purchases.
In effect, MicroStrategy’s S&P 500 ambitions could see bitcoin infiltration into nearly every portfolio exposed to U.S. equities, from pension funds to 401(k)s.
The equivalent of 0.01% of the S&P 500’s $41.9 trillion market cap amounts to $12 billion – so MicroStrategy punching above its weight could force institutional investors of all stripes to indirectly hold MicroStrategy’s bitcoin stash.
Considering MicroStrategy only initially paid $5.9 billion to accumulate its 190,000 bitcoins, swinging much larger passive allocations from S&P 500 inclusion could massively multiply the company’s war chest to keep stacking sats.
With bitcoin on the verge of another bull run, MicroStrategy continues to execute on its bet that bitcoin will be the world’s digital gold. Its $4 billion bounty to date looks set to keep swelling if bitcoin prices climb higher.
The post MicroStrategy’s $10 Billion Bitcoin Bet Paying Off Big: Could Bring Bitcoin to the S&P 500 appeared first on Blockonomi.
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