MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

[fillippone]

<...>
Now, I have noticed more and more that people prefer electronic payment over cash because of covid, and even offer a discount if the payment is made with electronic money, including bitcoin.

Wait.
I know what you meant in the above sentence, but that sent me a shiver down the spine.

There is a big difference between electronic payments and bitcoin.
Bitcoin is digital cash, something you cannot forget on the XII whitepaper anniversary:(Bitcoin: A Peer-to-Peer Electronic Cash System).
Cash means anonymous, peer-to-peer mean of payment:

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

Other digital payments, from Credit Cards to the hypothetical CBDC are not peer to peer, that is not cash. All those payments involve a third party, who exactly knows how, when and how much you spent your (their) money.

So, please, don't mix bitcoin with Orwellian surveillance systems. Bitcoin is digital cash, as opposed to physical cash.

[Ayiranorea]

What a profit, where this money coming from? MicroStrategy CEO personally holding $240 million worth of bitcoin. He has bought the bitcoin at an average price close to $10000 spending $175 million. Now he has made a net profit of more than $60 million. This has been a long term process because he has been buying bitcoin for a long and the news has been revealed to the outer world recently. Possibly this profiting itself attracts more similar profiled persons invest on bitcoin.

[JayJuanGee]

<...>
Now, I have noticed more and more that people prefer electronic payment over cash because of covid, and even offer a discount if the payment is made with electronic money, including bitcoin.

Wait.
I know what you meant in the above sentence, but that sent me a shiver down the spine.

There is a big difference between electronic payments and bitcoin.
Bitcoin is digital cash, something you cannot forget on the XII whitepaper anniversary:(Bitcoin: A Peer-to-Peer Electronic Cash System).
Cash means anonymous, peer-to-peer mean of payment:

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

Other digital payments, from Credit Cards to the hypothetical CBDC are not peer to peer, that is not cash. All those payments involve a third party, who exactly knows how, when and how much you spent your (their) money.

So, please, don't mix bitcoin with Orwellian surveillance systems. Bitcoin is digital cash, as opposed to physical cash.

Good point to emphasize, fillippone.

We surely have some Orwellian double-speak shit going on in recent times, and in the USA, when credit cards first came out, there were some rules that businesses could not refuse to accept physical cash.   And, sure I cannot remember the details, exactly there were also rulings about the fungibility of cash, in that businesses and the government would NOT be able to black list certain bill serial numbers - and a lot of the fungibility issues and even the forcing of businesses to take cash seem to have gone out the window due to the exaggeration of a virus.

I am not even trying to suggest that the virus is not real.. just that there seems to be a lot of convenient war upon physical cash.. and sure bitcoin is meant to be a kind of substitute for physical cash, and surely bitcoin HODLers are going to continue to find challenges in terms of challenges to fungibility...which therefore could end up affecting value  if vendors have some kind of requirement to ensure the purity of the bitcoins that they are accepting.

Of course, if bitcoins are not endorsed by governments, then they have rights to treat bitcoin differently from their own government payment systems - which is likely to continue to be an ongoing challenge for bitcoin in the coming years... probably 10-20 years or longer---- who knows how a lot of this plays out, even though options are continuing to be built that could cause security through obscurity, but still both parties in the peer to peer transaction do need to feel ready, willing and able to transact and surely the more that KYC/AML is ascribed to parties then the more uncomfortable they become - and surely seems to be more of an issue the higher the amount of value - and even governments seem to want to get into the business of private transactions for increasingly lower and lower amounts.. even a $10k threshold that has been around since about the early 70s through the bank secrecy act  hardly means anything as it did nearly 50 years ago... that value has been inflated away to cause government interference into way lower thresholds, that $10k in 1970 would be worth about $67k today.. but the government still wants to know more and more and more by NOT adjusting the threshold based on inflation.   

[JayJuanGee]

What a profit, where this money coming from? MicroStrategy CEO personally holding $240 million worth of bitcoin. He has bought the bitcoin at an average price close to $10000 spending $175 million. Now he has made a net profit of more than $60 million. This has been a long term process because he has been buying bitcoin for a long and the news has been revealed to the outer world recently. Possibly this profiting itself attracts more similar profiled persons invest on bitcoin.

Your first question about where money is coming from is a bit unclear, Ayiranorea.

Are you asking where Microstrategy or Saylor got his money?  They been in business for more than 20 years.

Are you asking how BTC prices go up and allow Microstratgy and Saylor to have on paper profits that are so high?

your question is rhetorical, right?  You don't really need to understand if the profits are real, do you?

Your second point about a supposed "long term process" seems to be the opposite of correct.

The fact of the matter is that Saylor and Microstrategy got into bitcoin recently.. at least that is the official story, and there are not really any facts to contradict that they got into bitcoin recently.  Microstrategy and Saylor seem to be examples of entities and persons getting into bitcoin and profiting very quickly (a kind of "good" timing).  A lot of short term players would like to get into bitcoin and then have prices go up and then withdraw with dollar profits, but that does not seem to be the strategy that either Saylor nor Microstrategy is playing... even though with any investment there is likely a decent amount of comfort if an investor puts in a considerably large front-loaded sum of money and has the investment go up very quickly.. there is likely a decent amount of comfort in having that - even if it might seem to be mostly on paper.

[Hueristic]

I'd like to see a forensic of Saylor coins.

[fillippone]

I'd like to see a forensic of Saylor coins.

Why would you?
Also, admitting you could discover Micheal Saylor address, what can you learn from a weak heuristic-based analysis?
Privacy is important, so don’t credit chain analysis firm for the poor job they are doing.

My thought on privacy:
A Treatise on Bitcoin and Privacy

[el kaka22]

It doesn't really change all that much if they made the profit this quickly right now or if they did it later on, it was always obvious that microstrategy would have made a good profit whenever bitcoin increases. They got involved at around $10k, there were other companies that got in as well and I could say that all of them got in right at the correct time but even if they failed they could have been increasing their profits in a month or two anyway.

When you get involved with this much money that usually means you do OTC trade and not right on the market price so I do not think that they were the ones that increased the price of bitcoin, of course their news was seen as a good think and maybe made some people buy but that is not a big reason, paypal probably had a bigger reason than this company did.

[JayJuanGee]

It doesn't really change all that much if they made the profit this quickly right now or if they did it later on, it was always obvious that microstrategy would have made a good profit whenever bitcoin increases. They got involved at around $10k, there were other companies that got in as well and I could say that all of them got in right at the correct time but even if they failed they could have been increasing their profits in a month or two anyway.

When you get involved with this much money that usually means you do OTC trade and not right on the market price so I do not think that they were the ones that increased the price of bitcoin, of course their news was seen as a good think and maybe made some people buy but that is not a big reason, paypal probably had a bigger reason than this company did.

You seem to be analyzing in loops and hoops in order to downplay the facts around the microstrategy entrance into bitcoin and also the impact of such a bold move from microstrategy, whether considering short term or long term effects.

You can analyze however you like and even suggest that bitcoin is at the top of some kind of cycle when it seems way more likely that whatever UPpity bitcoin cycle we are in, if any, seems to be considerably early in such cycle with Microstrategy (and even the quantity of Saylor's personal purchases) having a direct impact on  BTC upwards price pressures and also serving as a model and influence of other people whether normies, high networth individuals, companies or governments.

Of course, you can frame Microstrategy's behavior as an aberration or even consider him as a risk loving crazy person, but in the end, there are still only 21 million coins and there are only 900 new coins made available on a daily basis.. so from where are the coins coming and seems quite likely that we are going to continue to witness ongoing upwards price pressures on BTC prices in the coming 3 to 18 months, even if we might also experience some BTC price corrections along the way too, the ultimate direction seems to be UPpity... so sure, your milage (and framing of the matter) may well vary from this scenario that I am highlighting...see it as you wish.... sorry for your loss...       

[Kemarit]

And according to reports, MicroStrategy is up 50% in just three months:

MicroStrategy, an international business intelligence firm, invested $425 million in Bitcoin between August and September of this year. Now, its Bitcoin is worth $650 million.

https://decrypt.co/48512/microstrategys-bitcoin-is-worth-650-million-up-50-in-3-months

I don't know if the numbers is right though, but this could be one of the easiest profit a company has made without doing anything but just holding on their precious BTC. And yes, really worth the risk right now as the price surpassed $17k.

[gentlemand]

And according to reports, MicroStrategy is up 50% in just three months:

No reason why they should not be up. It aligns with when they bought. I hope for the sake of others sucked in that it doesn't become a bubble in its own right. The largest numbers of companies doing this will be near the end of the bubble.

All that 'this is a prudent move vs the depreciating dollar' will collapse in a firestorm of screaming and recrimination. Just like regular people but with much larger figures.

[fillippone]

And according to reports, MicroStrategy is up 50% in just three months:

No reason why they should not be up. It aligns with when they bought. I hope for the sake of others sucked in that it doesn't become a bubble in its own right. The largest numbers of companies doing this will be near the end of the bubble.

All that 'this is a prudent move vs the depreciating dollar' will collapse in a firestorm of screaming and recrimination. Just like regular people but with much larger figures.

With a very easy back of the envelope calculation, I can say to you that bitcoin is up 60% since their investment. So that being 33% of their market capitalisation equals to roughly a 20% increase only for this.
The whole market has gone up 7% in the meantime, so this is roughly a 27% appreciation.
The rest is idiosyncratic MSRT appreciation, for sure also due to their BTC investment.

[fillippone]

Weird choice by Microstrategy.

According to the following article, Coinbase was the platform used by Microstrategy to execute the long series of OTC and automated trades that led to their BTC investment.


Coinbase is helping corporate companies diversify with crypto

We’re excited to announce that Coinbase was selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin earlier this year. Using our advanced execution capabilities, leading crypto prime brokerage platform, and OTC desk, we were able to buy a significant amount of bitcoin on behalf of MicroStrategy and did so without moving the market. MicroStrategy chose Coinbase because of our market leading tools, which include smart order routing and advanced algorithms as well as our white glove sales and trading services.

In the Case Study redacted by Coinbase there is a detailed description of the way they managed to execute the trades without moving the markets.

I am perplexed with this choice, not only I don't like Coinbase, as you know it (Coinbase the most anti-Bitcoin organisation. Make #DeleteCoinbase great again), and I wouldn't expect someone defining himself as a Bitcoin enthusiast as Micheal Saylor, using them as a service providers.
More importantly , given the poor technical performances when market moves, I might be very cautious giving them a multi-million order to be flawlessly executed. There is plenty of other OTC Desk/Exchanges with same degree of liquidity and professionality also on the whole IT operations.
 

Of course their stance on privacy is less relevant here, as MSRT has surely been trough a very cautious KYC/AML/Onboarding screening before being green lighted to operate.

[Lucius]

As far as I remember from all the posts there were questions about how MS bought (and whether they bought BTC at all), but it always seemed logical to me that one big US company should choose another big US company for such a deal. I'm not saying they couldn't have done better, but obviously the assessment was that Coinbase would do the job the way MS envisioned it - which eventually happened.

According to what can be read in the blog, Coinbase, with its strategy, managed to save the client as much as 1% of the total transaction, which in this case amounts to as much as $4.25 million. All in all this is a very good self-promotion by Coinbase and an invitation to others to choose them in case they want to invest in BTC.

[Dragonfund]

All of a sudden, they begin to call bitcoin superior cash just because it's can easily turn one a millionaire with such kind of capital. There were the groups threatening Btc, calling it different names because they didn't get in earlier at the time but today, tye are shillings in other to accommodate other institutional investors. 

But come to think on a second thought, such kind of funds had been pump into Bitcoin in the past even when it made $19k in the past with a market cap of approximately 80 billion, it's nothing new, though but a welcome development.

[The Sceptical Chymist]

It's unbelievable how MSTR has performed since this thread started at the beginning of August:



Admittedly, the stock market is on a tear in general, but I'd say the market either likes MSTR in general or their decision to buy up all that bitcoin.

I am perplexed with this choice, not only I don't like Coinbase, as you know it (Coinbase the most anti-Bitcoin organisation. Make #DeleteCoinbase great again), and I wouldn't expect someone defining himself as a Bitcoin enthusiast as Micheal Saylor, using them as a service providers.
More importantly , given the poor technical performances when market moves, I might be very cautious giving them a multi-million order to be flawlessly executed. There is plenty of other OTC Desk/Exchanges with same degree of liquidity and professionality also on the whole IT operations.

I can't stand Coinbase myself and I couldn't tell you why Microstrategy chose them, but I suspect it has something to do with Coinbase being based in the US--but who knows.  There are a lot of details the general public isn't privy to when deals are made between companies. 

Either way, they did get their order executed.  As to whether it helped move the market upward, well....who knows.  Something caused bitcoin to shoot up to $19k.

[figmentofmyass]

It's unbelievable how MSTR has performed since this thread started at the beginning of August:



Admittedly, the stock market is on a tear in general, but I'd say the market either likes MSTR in general or their decision to buy up all that bitcoin.

it's clearly because of their investment in bitcoin. the nasdaq top 100 is up 15% since microstrategy first announced their bitcoin position. MSTR is up a whopping 160% in comparison! it's like night and day.

it sure looks like stock investors are using MSTR as a channel for bitcoin investment exposure.

[jaysabi]

It's unbelievable how MSTR has performed since this thread started at the beginning of August:



Admittedly, the stock market is on a tear in general, but I'd say the market either likes MSTR in general or their decision to buy up all that bitcoin.

it's clearly because of their investment in bitcoin. the nasdaq top 100 is up 15% since microstrategy first announced their bitcoin position. MSTR is up a whopping 160% in comparison! it's like night and day.

it sure looks like stock investors are using MSTR as a channel for bitcoin investment exposure.

It's not even necessarily because they believe in bitcoin themselves, it's just the arbitrage that the market demands. The balance sheet assets (because of bitcoin singularly) have ballooned significantly, which will cause the price of the stock to rise necessarily because the book value rises as the value of assets increases. The stock price appreciation is an indication that investors see "money on the table."   Doubtless some portion of these investors are likely btc bulls, but I wouldn't guess that they're investing in MSTR for their bitcoin exposure.  For one, if you just want exposure to btc, it dilutes the value of the btc exposure by investing in a business that could potentially drag the performance down (counter-point, investing in a business that generates cashflow and isn't based solely on speculation hedges risk), and secondly, gaining exposure through a medium you can't control puts you at risk that the company books profit when you wouldn't.  If you wanted btc exposure, it's very easy to get it yourself, without dilution and without a potential loss of control.  For these reasons, I view the price appreciation of the company stock as primarily a case of arbitrage (i.e., the stock price rises to match the rise in book value), not as people trying to get exposure to bitcoin.

[Twentyonepaylots]

I'm not sure how to feel about this really. On one hand we have the optimistis that believe companies and high-firm corporations adopting cryptocurrency is a good thing as it sparks change in the future of cryptocurrency. And on the other hand we have the people who are afraid bitciin is uet again going to be a cash cow for the capitalists. Either way, I am going to hodl on my coins for better or for worse and see what happens at the end of the road.

[TheGreatPython]

When someone invests this much into bitcoin, you do not expect them to say "well bitcoin doesn't look good, we took a big gamble with something risky like this" or anything like that. It is obvious that they are very much into crypto and bitcoin hence why they did something like this, it is obvious that they would basically do something as major as this only after they researched it very well too.

These people probably know more about crypto world than I do and I have been around for many years, if you are investing as large as 250 million dollars, you hire someone to check every single line of code as well, there is no way they didn't looked under every rock before they invested such a huge amount. So when these companies get in, that makes me feel a lot better.

[BTCappu]

Honestly that is the one greatest thing they have done that could put them on the map.

Microstrategy was something not that many people heard of, sure there were some people who heard of them but it wasn't really a huge number, but ever since they got into crypto they are the talk around the crypto world and also in the financial world all at the same time.

This is both looks to be promising and profitable move by them but also a great PR move by them at the same time, I doubt there was anything in the world they could have put their money into that could have profited them this much, but also it wouldn't create the recognition they created neither, this looks to be something awesome for them.