Up until now, Bitcoin has been known as a digital currency and investment for individuals. However, the year 2020 marks a significant change in how Bitcoin is being used as an investment asset. For the first time, companies are starting to get in on the potentials of Bitcoin. Business strategy and tech company MicroStrategy has started a trend this past August that has already been picked up by other companies and will lead to significant changes in the trading of Bitcoin and cryptocurrencies in general. Investors trading in Bitcoin already or interested in buying Bitcoin in the near future should understand what this means.
MicroStrategy carried out a significant purchase of Bitcoin on August 11th of this year. The company purchased a total of 21,454 Bitcoin for the price of $250 million. Michael J. Saylor- MicroStrategy’s CEO explained that this purchase was made to respond to the changes in Federal Reserve policy. Because the Fed has relaxed its inflation policy, Saylor stated that he realized the importance of converting its cash to Bitcoin. Saylor hopes it will serve as a hedge against inflation.
Since this initial purchase, the value of Bitcoin has shown volatility and dropped below $10,000. However, rather than panicking, Saylor and MicroStrategy showed their continued faith in Bitcoin’s future by purchasing almost 17,000 additional Bitcoin on September 14th.
It didn’t take long for other companies to follow MicroStrategy’s example and use the same strategy to deal with the current economic environment. On October 8th, financial services company Square made its own purchase of Bitcoin. Square invested a total of $50 million by purchasing 4,709 Bitcoin.
In an article published on the company’s website, Square stated that the company sees cryptocurrencies in general as a tool that will lead to economic empowerment. They also stated that the recent investment was equal to 1 percent of the total asset that the company possessed in 2020’s second quarter.
The Chief Financial Officer of Square, Amrita Ahuja, expressed expectations for cryptocurrencies to become increasingly prominent down the road. Although this is the first time Square has made a financial investment in Bitcoin, it is not the first time the company has been involved with crypto. Back in 2018, Square added service to its payment app that allowed for Bitcoin trading. The company added a Square Crypto features that encourage Bitcoin development by awarding grants to developers.
Square’s efforts to get involved with crypto have been fruitful. Trading revenue from Square’s payment app has continued to rise over time, thanks mainly to Bitcoin trading on the app.
It’s worth noting that MicroStrategy and Square are not the only companies that have made a significant Bitcoin investment. Two other big corporate Bitcoin investments to make a note of are those of Grayscale Bitcoin Trust and Coinshares.
It’s not surprising that Grayscale Bitcoin Trust would own a significant amount of Bitcoin itself since the company itself is in the Bitcoin industry. The firm owns 449,596 Bitcoin as of mid-October 2020. Coinshares owns 69,730 Bitcoin. Altogether, 13 different companies own Bitcoin. This makes for a total of almost 600,000 Bitcoin owned by both private and publicly traded companies.
Company ownership of Bitcoin is a clear sign that the value of Bitcoin has finally been universally recognized. Companies are now taking the potentials of Bitcoin more seriously by investing their funds. Companies owning Bitcoin also creates more competition for the individual crypto investor. It can be challenging for small individual investors to compete with large corporate investors, especially as Bitcoin’s price continues to rise.
As it is, Bitcoin has been doing quite well in 2020. As of early October, Bitcoin was up by 50 percent from the beginning of the year. The main reason Bitcoin went up so high was its negative impact the Coronavirus pandemic had on the US. Dollar. The pandemic is here to stay for the time being, so Bitcoin is likely to continue to rise, at least until the pandemic is resolved.
However, investors see even more promise in Bitcoin down the road. Many crypto trading experts feel that Bitcoin might eventually each $1 million in value a few decades down the road. Even if Bitcoin never reaches a value this high, companies now investing in the cryptocurrency show that currently, there is an enormous amount of potential for continued growth over the coming years.
It could be an excellent time to get into the Bitcoin race by buying Bitcoin. With companies making large purchases in the prominent cryptocurrency, its value is likely to continue rising. Although other cryptocurrencies like Ethereum and XRP are contending for Bitcoin’s market dominance, Bitcoin remains the most valuable and widely recognized digital currency out there.
Those who don’t get in the global Bitcoin race now stand a good chance of getting left behind. Now’s the time to stake out a Bitcoin claim and take advantage of Bitcoin’s promising future.
Disclaimer: The information provided on this blog is for informational purposes only and should not be taken as any form of advice.
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