After Microstrategy and Tesla, Microsoft could soon take the plunge by adopting Michael Saylor's Bitcoin strategy.
The Bitcoin Strategy
In August 2020, MicroStrategy became the first multinational to make bitcoin its main treasury asset. Its objective was to counter the continued depreciation of the dollar which effectively lost 20% of its purchasing power in the process.
Proving that this strategy works wonderfully, Microstrategy's stock is appreciating more quickly than the giant NVIDIA. The first has garnered 430% since January compared to “only” 190% for the second.
Microstrategy feeds on the performance of bitcoin which has soared by 120% at the same time. This correlation is explained by the presence of 331,200 bitcoins in its treasury. Clearly, its action has become a derivative of bitcoin. Obtained at an average price of $49,874 (~$16.5 billion), these BTC are now worth more than $30 billion.
The difference (430% > 120%) is due to the fact that Microstrategy goes into debt to buy bitcoins. In other words, investing in MSTR stocks is like buying BTC with leverage without the risk of being liquidated by volatility.
Other companies such as Block and Tesla are already following in Microstrategy's footsteps. Hoth Therapeutics, Solidion Technology, Thumzup Media, Genius Group, Cosmos Health and BlockStream have adopted the same strategy as Microstrategy in recent days.
These are small market capitalizations, but a heavyweight should soon enter the fray: Microsoft.
Melting Ice Cube
Microsoft is not a complete stranger to bitcoin. The technology giant has accepted it as payment since 2014 on Windows and Xbox Store.
The Mountain Views firm has not made it a cash asset, but the insolent success of MicroStrategy could change that. The bitcoin strategy will be on the menu at the December general meeting of shareholders.
Here is a passage from document published by Microsoft in preparation for the shareholder vote:
Microstrategy – which, like Microsoft, is a technology company, but which, unlike Microsoft, holds bitcoin on its balance sheet – has seen its stock performance outpace Microsoft's by 313% this year. And this although it only does a fraction of Microsoft's activity. And they are not the only ones. The adoption of bitcoin by institutions and businesses is becoming more and more common. BlackRock, Microsoft's second largest shareholder, offers its clients a Bitcoin ETF.
Shareholders have until December 10 to make themselves heard. Let us bet that the speaking of Michael Saylor during the AGM will tip the scales.
A positive vote could trigger an avalanche, knowing that ten companies, including Apple, Google and Microsoft, hold more than a third of the 2.5 trillion dollars held by the entire S&P 500 (American stock market).
Microsoft has $78 billion in cash, Apple $156 billion, Google $93 billion, Amazon $88 billion, etc. So much money quickly eaten away by inflation.
Bitcoin for everyone
Governments are not left out. Small countries like El Salvador and Bhutan have been accumulating bitcoins for several years. Not to mention those who prefer to remain discreet, particularly in the Middle East, if we are to believe the words of Mike Novogratz.
Countries are already buying bitcoins. I have a good friend in the Middle East who never told me he had never seen this. […] World leaders heard Donald Trump say in Nashville that he would be a “Bitcoin President.”
CEO of Galaxy Digital on Bloomberg
How could the rest of the world stand idly by if the US government creates a strategic bitcoin reserve? Even the governor of the Bank of France has recognized the evidence, which is saying…
If Senator Cynthia Lummis has her way, the United States will get its hands on a million bitcoins. In this scenario, the whole world will follow, including Europe. The candidate for the Polish presidency Sławomir Mentzen understood it well:
Poland should create a strategic bitcoin reserve. If I become president of Poland, our country will have very favorable regulations and low taxes. Banks and the regulator will have to provide support. The bill is ready. Let's stop waiting. Instead of passing absurd cryptoasset bills, let's create a strategic reserve before it's too late.
There is a very good chance that Donald Trump will make the Bitcoin bet. With the fresh appointment of Howard Lutnick as Commerce Secretary, the Trump government now has nine bitcoin owners…
Don’t miss our article: “Why the $100,000 is imminent.”
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