The value of bitcoins at MicroStrategy’s disposal has surpassed the traditional currency reserves of most S&P 500 companies.
MicroStrategy this week reported the acquisition of 5,050 bitcoins for $ 243 million, bringing its position size to 114,042 BTC or $ 5.3 billion at the current exchange rate. This figure exceeds the cash reserves of 80% of non-financial companies on the S&P 500, according to Bloomberg data.
MicroStrategy made a bet on bitcoin in mid-2020 and has been steadily increasing its investments since then, explaining this by the desire to hedge the risks of a decline in the dollar. Other companies have since followed suit, including Tesla and Square.
At the same time, less risk averse firms continued to accumulate traditional currency reserves. So, in the second quarter, non-financial companies increased the volume of such reserves by 12% compared to last year, amid the uncertainty caused by the COVID-19 pandemic.
Several companies, including General Electric, Ford and Boeing, began spending cash reserves in the third quarter. In July, they cut such reserves by $ 30 billion, or 2% over last year. At the same time, Amazon and Alphabet continued to accumulate traditional currencies. As a result, the monetary assets on the balance sheet of American corporations fell from $ 1.55 trillion to $ 1.52 trillion. The main items of expenses were the purchase of third-party firms, own shares and an increase in dividends. The trend indicates a decrease in fears and a greater disposition of companies to spend, Bloomberg notes.
MicroStrategy shares are up 359% over the past 12 months, along with bitcoin, which is up 314% over the same period.
On this basis, many analysts conclude that MicroStrategy securities actually allow investors to gain access to the cryptocurrency market without its inherent restrictions.
“It’s no secret that MSTR is valued higher than the net worth of the coins it holds. I don’t think investors are buying these shares because of expectations regarding her traditional business, ”writes an analyst at Kingdom Capital. “The most obvious reason: it is one of the few large-cap companies in the BTC space.”
At the same time, Kingdom Capital admits that investors will reduce the share of MicroStrategy shares in portfolios as other mechanisms for investing in Bitcoin, such as ETFs, develop.
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