MicroStrategy Incorporated (NASDAQ: MSTR), the tech company led by billionaire Michael Saylor, has purchased 11,931 Bitcoin between April 27 and June 19, bringing the total Bitcoin holding of the company to a staggering 226,331 tokens, valued at close to $14 billion at today’s prices. MicroStrategy is the largest public holder of Bitcoin, followed by Galaxy Digital Holdings (BRPHF), Marathon Digital Holdings (MARA), and Tesla, Inc. (TSLA) with 17,518, 13,716, and 10,500 tokens, respectively. Billionaire Saylor, recently appearing on a podcast, claimed that fiat currencies will eventually go extinct, paving the way for Bitcoin prices to eclipse $10 million per token. He also believes that exposure to Bitcoin offers immunity from macroeconomic downturns, which could be one major reason behind the purchase of Bitcoin by publicly listed tech companies.
The Price Is Right
Bitcoin prices have slumped after reaching a peak of around $74,000 in March with crypto whales selling more than $1 billion worth of Bitcoin in the last couple of weeks alone. On the back of this price weakness, many Wall Street analysts have turned bullish. According to Bernstein analyst Gautam Chhugani, Bitcoin prices will hit a peak of $200,000 in 2025 and cross the $1 million mark by 2033. These rosy projections point to a massive upside from today’s Bitcoin prices of around $60,000. James Check, the former head of research at Glassnode, believes Bitcoin prices will reach $100,000 in this cycle before entering bear territory. Cathie Wood’s ARK Invest has assigned Bitcoin a long-term price target of $1.5 million, which makes the current level of prices very attractive to investors.
What Are Tech Companies Using Crypto For?
Tech companies have been investing in Bitcoin for several reasons. First, Bitcoin is expected to act as a hedge against inflation as opposed to fiat currencies that lose purchasing power during periods of elevated inflation. The perceived value of Bitcoin as a hedging instrument has convinced tech companies to carry Bitcoin on their balance sheets. Second, corporate giants view Bitcoin as an investment vehicle that allows them to enjoy capital gains. MicroStrategy’s investment in Bitcoin is a classic example of a tech company investing in Bitcoin in search of investment returns. Finally, some tech companies such as Tesla are gaining exposure to Bitcoin to be prepared for a future where fiat currencies may be replaced by decentralized currencies such as cryptos.
Dilantha DeSilva does not have positions in any of the companies or securities mentioned in this article. Stocks.News has positions in Tesla.
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Dilantha is a former buy-side equity analyst who now contributes to Seeking Alpha, GuruFocus, TipRanks, and ValueWalk. He is the founder of Beat Billions, a premium investment research subscription service on Seeking Alpha’s Marketplace. He has appeared on CNBC and Bloomberg to discuss stock markets and the global economy.