Why is Bitcoin "digital gold" crashing right now?

tecate

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In a further boost to bitcoin's formative claim as digital gold, $1.2 billion business intelligence company MicroStrategy announced today that it had recently purchased $250 million worth of bitcoin - making it the company's primary treasury reserve asset. CEO Michael Saylor stated:

"We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value. Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”
"[Bitcoin] is a dependable store of value" he added.

CFO Phong Le:
"MicroStrategy believes that buying $250 million in Bitcoin will provide it the opportunity to earn better returns and preserve the value of our capital over time compared to holding cash."
 
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Gus1970

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In a further boost to bitcoin's formative claim as digital gold, $1.2 billion business intelligence company MicroStrategy announced today that it had recently purchased $250 million worth of bitcoin - making it the company's primary treasury reserve asset. CEO Michael Saylor stated:
May i suggest this to be a new thread? It would be useful to discuss how organisations are starting to use bitcoin and crypto in general
 

tecate

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May i suggest this to be a new thread? It would be useful to discuss how organisations are starting to use bitcoin and crypto in general
It's a landmark move for sure. It's the first publicly listed company to make this allocation. Furthermore, the size of the allocation relative to the overall size of the company is not lacking in conviction. The expectation is that others will now follow.
 
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Gus1970

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Furthermore, the size of the allocation relative to the overall size of the company is not lacking in conviction
I would not be surprised if the share price of the company started following the bitcoin price trajectory as the company is 20% made of bitcoin
 

tecate

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I would not be surprised if the share price of the company started following the bitcoin price trajectory as the company is 20% made of bitcoin
Upon that news yesterday, its share price jumped around 15%. This could also be an indirect way for people to gain exposure to bitcoin - for those that don't want to handle the asset directly themselves. Rather than buy into Grayscale Trust (GBTC) at a premium they can buy into Nasdaq-listed MicroStrategy instead.
The company bought 0.1% of bitcoin supply. Going forward, it won't be as easy for the others that follow them to emulate in terms of percentage.

Potential Implications for International Settlement
There's another aspect to all of this also. Lets say that other corporations follow suit. One of the biggest issues that these guys encounter is friction in terms of international settlement - as the current system involves intermediaries and counterparties - and counterparty risk and delay. These delays cost them a tonne of cash. Maybe they wouldn't have to access that system at all and can go direct? Bitcoin is deliberately basic from a programming point of view. However, my understanding is that it can still do smart contracts. If there is a need for certain conditions to be met in executing a transaction between two corporates, then it may be possible to write that in to a smart contract - with the bitcoin transaction executing upon fulfillment of those conditions.
In this way, the archaic international settlement / banking system can be avoided completely. Trades can then be done incredibly quickly and far more cost effectively.

This may well get tackled using other crypto's. Ethereum/Tezos/Cardano offer far better flexibility in terms of programmability for smart contracts. However, if corporates took to holding bitcoin as a hedge/store of value anyway, then it might make for greater motivation in making corporate-to-corporate international settlement via bitcoin directly possible instead.
 
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tecate

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On Friday, former head of Prudential Financial ($1.3 trillion AUM) - George Ball, said that bitcoin is a safe haven asset in the context of ongoing money printing. In an interview with Reuters, Ball stated that he had always seen himself as an opponent of bitcoin but has revised his view in the face of currency debasement through rampant money printing.
 
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tecate

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In a further boost to bitcoin's formative claim as digital gold, $1.2 billion business intelligence company MicroStrategy announced today that it had recently purchased $250 million worth of bitcoin - making it the company's primary treasury reserve asset. CEO Michael Saylor stated:
MicroStrategy has completed the purchase of a further $175 million worth of bitcoin, bringing its total bitcoin holding to 38,250 btc (approx. $425 million).

Only 483 individuals / individual entities could possibly obtain this number of btc given bitcoin's fixed cap supply. The MSTR stock price has risen 9% following the news. Podcast with MicroStrategy founder and CEO, Michael Saynor where he explains the company's decision to switch from cash reserves to bitcoin.
 
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