The Bitbuy Brief: A NASDAQ listed company just went all in on Bitcoin

The Bitbuy Brief

Issue #109

August 13th, 2020

Weekly Market Movement

Analysis: Crypto saw a dip overall in the 7 day period, mostly happening in the past 48 hours. ETH saw its first weekly decline in over 5 weeks, and BTC only saw its 2nd decline in that same time period. Volumes dipped slightly as well, yet are still trending above 30 day spot averages.


Big Story Of The Week

Earlier this week, NASDAQ-Listed Technology Company Microstrategy (NASDAQ: MSTR) Announced That They Had Invested USD 250M In BTC As Part Of A New Capital Allocation Strategy – The Firm Further Referred To The News As Making BTC Their, ‘Primary Treasury Reserve Asset’ – In This Announcement, MSTR Has Arguably Made Itself The Most Important ‘Traditional’ Company To The Crypto-Space Globally

  • MSTR is a US-based technology services company operating in the sub-sectors of business intelligence, mobile software and cloud-based services. The company, headquartered in Virginia, was founded by Michael J. Saylor and Sanju Bansal in 1989, Saylor remains the CEO. The firm’s market cap is USD 1.3B and shares rallied +9% on the back of the news. In the announcement, MSTR, which had been discussing what to do with excess capital, will make ‘bitcoin’ their, ‘Primary Treasury Reserve Asset,’ meaning it will be their largest treasury investment. The characterization seems to imply that MSTR will be an ongoing buyer of BTC with net income in 2019 of $34M. The press releases cited considerations such as inflation protection versus fiat alternatives as the primary justification for the move.

Takeaway: The announcement comes as a surprise for crypto practitioners in that it is a massive leap above what any publicly listed entity has committed in crypto (Square would be the firm that has any argument to say otherwise). It is a bold move for a publicly listed company to essentially allocate ~20% of the company’s assets towards BTC. The crypto seems likely to become a far greater contributor to the company’s stock price than growth rates. The press release, however, does read somewhat like it was written by a crypto-novice. There are subtle items such as the release referring to ‘bitcoin’ as opposed to BTC and therefore not identifying which bitcoin chain they are referring to. In addition, the release uses the plural ‘bitcoins’ which is much less commonly used than the singular ‘bitcoin’ in the way that one says, ‘100k yen’ and not ‘yens.’ Regardless, MSTR has just made a commitment that would be described as aggressive even by crypto advocates. They will be a closely followed corporate precedent for such moves.

Other Weekly Headlines

  • According to crypto news site The Block, unnamed sources say JP Morgan intends to invest USD 20M in Ethereum development firm ConsenSys and will be leading a USD 50M convertible note raise for the firm. ConsenSys would also take over maintenance of JP Morgan’s Quorum blockchain. link – @TheBlock
  • Coinbase has resigned from crypto and blockchain lobby and advocacy organization the Blockchain Association. Crypto outlet The Block reports that the reason behind the move is the admission of Binance.US to the organization. link – @TheBlock
  • Decentralized exchange liquidity aggregator has raised $2.8 million in its first external funding round led by Binance Labs. The round also saw participation from FTX, Galaxy Digital, Dragonfly Capital and others. link – @TheBlock
  • Blockstack, a decentralized app network, has transferred $27M of its Stacks (STX) token to the Stacks Foundation with the hope of decentralizing the network. Blockstack is also providing the foundation with a USD 950k loan for ‘working capital’ and transferring intellectual property related to the – @Blockstack
  • Chia Network, described as, ‘a blockchain and smart transaction platform’ and led by BitTorrent creator Bram Cohen, has raised USD 5M in a raise led by Slow Ventures. The startup raised ~$16M in funding since launching in 2017. The network’s mainnet is due for launch later this year. link – @CoinDesk
  • Facebook has formed a new group called Facebook Financial, which will be led by David Marcus, who leads the Libra cryptocurrency effort. Marcus will continue running Novi, the social media’s digital wallet entity previously known as Calibra. – link – @BloombergLong Read Of the Week The Investment Case for Bitcoin, VanEck, August 2020
  • ETF and mutual fund manager VanEck released its take on the selling points of bitcoin in Q2 of 2020.