Whilst Ethereum may well be the darling of the technologically advanced developers of Decentralized Finance (DeFi) and is rising in value due to its multi-faceted blockchain structure which is the basis for smart contract development and many native tokens, Bitcoin remains the choice as a store of value or commodity.
We are entering a turning point in the life cycle of investment in Bitcoin, which has spent most of this year going from strength to strength as investor confidence was bolstered by the US Securities and Exchange Commission (SEC) having held several key meetings to develop a regulatory framework for cryptocurrency, and by the stress test which saw Bitcoin’s infrastructure completely unaffected by the closing down of vast mining entities in mainland China which accounted for 70% of all Bitcoin mining.
Indeed, Bitcoin prices have continued to rally and have been reaching all time highs lately, making Elon Musk’s famous tweet back in May appear a distant memory, or be considered a minor blip which simply served to get even more people interested in investing in Bitcoin.
Now, the big corporations are moving in. We have all seen the mass accumulation of Bitcoin by ‘whales’, those being individuals or groups which hold massive amounts of Bitcoin, in some cases enough cryptocurrency that they have the potential to manipulate currency valuations.
Recently, monitoring the behavior of ‘whales’ has been used as an indicator of market sentiment, as they often expend a huge amount of resources working out when to buy and sell, and usually do so in large amounts.
Now, however, there is a new dynamic, and that is the big corporations.
Large corporations with responsibilities to public shareholders as well as long-term customers, themselves often corporate giants, are not usually ones to take risks. Their duties are often prohibitive in case of falling foul of shareholder discourse, or being de-listed from a major stock exchange, or worse, being regarded as risk-takers and giving their competitors an edge when tendering for contracts.
Times are changing, because MicroStrategy, a business intelligence, mobile software, and cloud-based services company which was founded in 1989 and is based in Tyson’s Corner, Virginia and listed on the London Stock Exchange with an annual revenue of $480 million has just bought $414 million worth of Bitcoin.
The company has been investing in Bitcoin for a while, and this has been well received by its shareholders, as the company’s Bitcoin stake is now worth $7 billion after this week’s large purchase.
MicroStrategy began buying Bitcoin in August 2020, and should the price of Bitcoin continue to recover from the downward trend which took place over the Thanksgiving holiday, MicroStrategy will have doubled its money based on the average purchase price paid since the initial acquisition.
MicroStrategy is the largest corporate investor in Bitcoin in the world, and could well be spearheading a new direction for Bitcoin investment among other corporations given that it has been a hit with its own shareholders and board of directors.
These are certainly times at which Bitcoin is going from being a store of value for those wishing to circumvent the traditional investment system to being a way for large traditionally-structured companies to participate in investment in decentralized financial instruments and make their own fortune without risking it in the hands of centralized financial institutions.
Companies the size of MicroStrategy are ideal investors in Bitcoin. They are large enough to be able to capitalize by purchasing enough cryptocurrency to store a rapidly appreciating asset that is not subject to any manipulation or corrupt dealings by banks or fund managers and can be masters of their own destiny.
We have all seen the reports over the past ten years of bank traders manipulating Forex benchmarks, and of the demises of pension funds or the scandals associated with wealth managers, some of which have enjoyed a stellar reputation until they fell foul.
Therefore, Bitcoin provides the ideal vehicle for self-determination for companies with money to invest and shareholders to please.
In terms of the corporate use of Bitcoin, that is also a trend on the up, and CoinMetro offers a business account in which small to medium sized businesses can receive and store treasury in cryptocurrency.
Most certainly, cryptocurrency is going down the commercial route, and fast!