Another billion-dollar company turned to Bitcoins to secure the dollar

Another billion-dollar company told investors that will invest some of its assets in Bitcoins to maintain the value of its capital against the weakening dollar. BTC, which offers investors a lucrative upward trend and protects against political risk, could become the basis of corporate portfolios in the future.

From the entry of institutional investment funds to demand from retail and macro investors, bitcoin fundamentals paint a very bullish image. There is another catalyst that could trigger another influx of capital into Bitcoins: corporations.

Billion-dollar company MicroStrategy: We need to maintain a healthy capital base

MicroStrategy, an analytics software company, wants to invest in precious metals and Bitcoin to increase the strength of its balance sheet. While the company is distributing profits to its shareholders, it wants to hold on to some money for internal investments to grow the business.

Phong Le, CFO of MicroStrategy, told analysts in a quarterly report that the company will transfer $ 250 million to assets such as stocks, silver, gold and Bitcoin. Co-founder and CEO Michael Saylor justified the need for the following investments:

“Having said that, we need to maintain a healthy capital base. It’s the equivalent of our endowment as an institution and we need that capital base in order to assure our investors, our employees, our customers, and our partners that we’re going to be around through good times and bad times. So while it’s potentially dilutive for us to carry that capital in dollars, that doesn’t mean that we don’t need the capital. Hence, if we look at assets, gold, silver, bitcoin, and equities have all been accreting as the dollar has been weakening.”

In addition to hedge funds such as Renaissance Technologies and Tudor Investment Corp, traditional companies are also looking to expand their capital base to financial markets. Every public company has some investments, whether in one asset or in different assets.

For example, at the end of 2019, Apple had $ 170 billion in long-term investments and $ 40.39 billion in short-term investments. As the dollar weakens, capital shifts into risky assets that prevent these companies from losing purchasing power.

Large companies like Apple and Microsoft prefer stocks because they are more liquid and reliable. However, Bitcoin has its own unique place in the portfolio of other companies. Although it acted as a risky asset in 2020, it proved to be a strong hedge against political uncertainty.

As the Fed promises consistently low interest rates, more companies will consider adding Bitcoins to their portfolios as bond yield opportunities dry up.

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