Big Money Finds Bitcoin in 2020 — Hedge Funds, Service Providers, Big Firms, and High Profile Investors
Since cryptocurrency markets began seeing a resurgence, months ago, there have been various instances of ‘big money’ getting in on the action. Examples of this can be seen on various levels, including high profile investors, intelligence firms, hedge funds, and service providers. Today we’ll take a look at each, and why an entrance is being made now.
SQUARE
The financial services company, which is led by Twitter co-founder and CEO Jack Dorsey, announced Thursday that it bought 4,709 bitcoins at the price of $50 million. The investment represents almost 1% of the company’s total assets as of the second quarter of 2020.
“We believe that bitcoin has the potential to be a more ubiquitous currency in the future,” Square’s Chief Financial Officer, Amrita Ahuja, said in a statement. “As it grows in adoption, we intend to learn and participate in a disciplined way.”
Square shares were trading up about 2.3% midday Thursday.
This is not Square’s first foray into crypto. In 2018, the company expanded its mobile payment service Cash App to support bitcoin trading, even for users without a bank account. And in 2019 it launched Square Crypto, which awards grants to bitcoin developers and designers.
So far, Square’s bullishness on bitcoin has paid off. In August, the company reported that bitcoin trading revenue from Cash App rose 600% from the previous year to $875 million. The cryptocurrency also accounted for almost half of Square’s total sales of $1.92 billion.
MicroStrategy
Our first example is also the most recent occurrence. Only days ago, software giant and intelligence firm, MicroStrategy, announced to the world that they purchased a significant sum of Bitcoin. More specifically, MicroStrategy purchased 21,454 BTC, which equates to roughly $250M USD.
Why now?
Michael Saylor, CEO at MicroStrategy, states,
“Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders…This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
To reiterate, the world’s largest intelligence firm notes that Bitcoin…
- is a dependable store of value
- has long-term appreciation potential
- appeals to, both, individuals and institutions
- is a legitimate asset
- can be superior to cash
As the aforementioned figures would indicate, MicroStrategy fully believes this, as it has put its money where its mouth is — to the tune of $250 million
An Increasing Pace
Each of these instances on their own may not upend markets. Cumulatively however, they point to a positive shift in sentiment towards cryptocurrencies. While the ‘why now’ may vary between each new entrant, Bitcoin markets are no longer populated solely by speculative retail traders, but home to participants from a variety of sectors. It is viewed as a legitimate asset, and whether looking at service providers, hedge funds, intelligence firms, etc. — adoption is occurring at an increasing pace. This is a necessary step in bringing Bitcoin to be a cornerstone in the global financial system, and the way there goes through decisions like those Michael Saylor & Jack Dorsey made. If this becomes a movement, the next phase will be nation state and central banks taking the same route. reason is that the same network effect applies at larger scale, and once the first central bank decides to take the move, the race begins. We are still not there , but when we do get there, these tend to be happening fast. but let’s wait and see.
