Macro Dose - Large Companies Mimicking the Microstrategy Model? What You Need to Know
Rise of Saylor, Institutional $BTC Buying, & More
Happy Thanksgiving to the Americans. In the past several weeks, we’ve seen a slew of powerful organizations around the world come out in support of $BTC. While they might not say it outright, this sentiment is mostly inspired by soon-to-be President Trump’s explicit support of the asset. The phrase ‘slowly, then all at once’ and other adages apply in this scenario, as it seemingly took arguably the most powerful man in the world to give everyone else the go-ahead before they felt comfortable showing support for Bitcoin.
If even a fraction of the funds that go toward building national reserves of the top economies in the world are allocated toward $BTC, this would be instrumental for the price, obviously. In last week’s edition, we discussed some of the geopolitical game theory that might occur between nations in a bid to accumulate $BTC reserves, just as we’ve seen various countries stockpiling gold recently to get away from the U.S. dollar’s hegemonic dominance. In today’s edition, we’ll go in a bit of a different direction, and discuss the corporate adoption curve of $BTC by private businesses, sparked by the outstanding success of Microstrategy and sustained demand for $MSTR shares.
Revival of Microstrategy
Microstrategy, spearheaded by Michael Taylor for well over 20 years, started as an Internet company that faced its fair share of trouble. A glance at the $MSTR all-time chart makes it visibly apparent, as the company’s stock price fell from a high of ~$3,000 to ~$4 rather quickly. Only recently has $MSTR been able to put in new all-time highs. This is no small feat, and it took a complete renovation of the company’s entire business model for this to be achieved.
Likely as Microstrategy began losing some relevance in the Internet services sector, Michael Saylor saw an opportunity to become the first major and vocal supporter of Bitcoin in the TradFi world. Saylor wouldn’t simply purchase a nominal amount of $BTC for the company to hold; he would make $BTC the company’s entire business model. He began doing podcasts and attending conferences, increasing $MSTR mindshare among crypto or Bitcoin natives, and $BTC mindshare among TradFi types.
Nation State vs Institutional Adoption of $BTC
Being anti-crypto in today’s world now is simply strange, and even still being skeptical of Bitcoin might be considered a contrarian view depending on who you ask. With BlackRock, the largest asset manager in the world, getting involved with both $BTC and $ETH, the doors are open for big businesses to begin playing with $BTC again. This comes after Tesla somewhat distanced itself from the asset back in 2021 which probably paused institutional interest from non-asset managers.
For publicly listed companies, the concept of shareholder primacy drives a lot of decision making.$MSTR has put in historic gains since ~2020, outperforming even $NVDA. With a stock of this size seeing such outsized returns, executives are forced to consider if allocating some capital toward $BTC or mimicking the Microstrategy model in some tiny way might be able to boost share price to some effect.
The rationale for acquiring $BTC from private institutions vs nation states is a little different. Governments have to contend with the largest country in the world nominally potentially putting in continuous buy orders for $BTC starting sometime next year. In this sense, the buying is much more orchestrated and transparently telegraphed, giving competitors time to position and allocate accordingly. Meanwhile, Microstrategy announces their buys after the fact, though people often guess when they might have taken place.
Another difference between government and private accumulation of $BTC is the motivation; $BTC could actually serve as a hard-money type asset similar to Gold in a country’s reserve. Gold plays a meaningful role in the nation-state world, and governments are the biggest buyers. Governments’ rationale is that $BTC has long-term value, and can provide stability, a way to store wealth.
On the other hand, private companies have a much shorter time horizon. There’s a reason that even large institutions don’t typically hold large amounts of Gold on their balance sheets; it’s simply an unproductive asset that doesn’t spur growth or help the business in any tangible way. It can serve as something between an inflation hedge against cash holdings and an investment.
However, the success of $MSTR adds a new motivation into the mix; speculation. Even if holding $BTC might not help the company find more success in their respective industries, it still might boost share prices. Holding $BTC could become one of those things that many large companies are softly obligated to do, like having offices in a prime location in the city, having company newsletters, etc. a larger scale ‘keeping up with the Joneses’. Just like nation-states, private companies also feel the push to compete and outdo one another.
Mimicking Microstrategy
Just as Trump’s support for $BTC prompted other countries to take action, $MSTR’s success could be the driving force for publicly listed companies to accumulate some amount of $BTC. $MSTR’s success can’t be understated; it also serves as the primary beta to $BTC among publicly listed entities, outperforming $BTC miners. Now, even miners are also beginning to issue debt in order to buy $BTC, as seen with Marathon Holdings ($MARA) recently. The company recently bought over $600M in $BTC, with an additional $1B in zero-coupon notes also just issued with the intention to buy even more.
In fact, numerous companies have come out and alluded to $BTC purchases. Though these buys may not be as big as Saylor’s and they may not be issuing stock or bonds to get funding for these buys, the demand for institutions to simply acquire $BTC for their balance sheet or treasury is now significant, and may only grow.
Just today it was also announced that a publicly traded Chinese company, SOS, would soon buy $50M worth of $BTC. The company’s board of directors approved of this plan, citing that this acquisition strengthens efforts to get more involved in blockchain as well as just putting a strategic asset on the company’s balance sheet.
China in particular has been subject to swirling rumors around crypto’s legality, especially $BTC. As we’ve discussed many times, China is the only economy of a similar size as the U.S., and any news around the Chinese government giving green lights for $BTC is more important than other countries like Japan, Brazil, etc.
The other notable company besides Microstrategy that expressed a lot of interest in $BTC is Metaplanet, a Japanese company. Metaplanet has also issued one-year debt sales, albeit much smaller than Microstrategy’s ($11.3M most recently) to purchase $BTC. At this time, Metaplanet now holds over 1,000 $BTC.
Overall, the institutional buying of $BTC is yet to reach significant levels outside of Microstrategy’s own buys. While governments are the party that everyone has their eye on, as they are the largest potential buyers in the world, private companies have a lot of firing power as well. In the event that a U.S. $BTC strategic reserve sees a delayed rollout or halted progress, the same dynamics we see from other countries looking to get ahead of American $BTC buys might also play out among private, publicly-listed companies. This process has already started, though there’s a lot of room for growth in this vertical considering that any other efforts exhibited so far pale in comparison to the scope of Microstrategy’s operations.
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