MicroStrategy Outperformed Nasdaq After $175M Bitcoin Foray

Microstrategy outperformed Nasdaq after its $175 million Bitcoin foray suggesting that the asset class is luring in more traditional investors. Microstrategy made its second BTC purchase and pushed the total cash holdings to more than $425 million as we are reading more in today’s bitcoin news.

The company’s stocks increased by more than 9.3% after the news emerged so the investors responded as well and this could indicate a positive sentiment towards crypto assets. Microstrategy outperformed Nasdaq as the stocks increased by more than 9 percent and their CEO revealed the company purchase another $175 million in BTC. The investment makes up the part of the company’s strategy to diversify into crypto.

The company made a huge purchase of Bitcoin which marks the second time in two months. The first purchase was in August when it diverted more than $250 million worth of cash holdings to assets such as gold, silver, stocks, and Bitcoin. With the latest $175 million BTC purchase, the Delaware-based software company showed even more trust in BTC as a store of value as the company holdings stand at 38,250.

Public filings with the SEC show that the company could exceed holdings into Bitcoin above $250 million. Microstrategy’s move into bitcoin seems to be pleasing the market participants as the company’s stocks jumped by 9 percent while Nasdaq Composite sat a one percent gains. The competitor IT services companies saw slight movements. Cognizant increased by 1.2 percent, Infosys was up by less than one percent as well as Citrix System that was up under one percent as well.

On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.

— Michael Saylor (@michael_saylor) September 15, 2020

The intention of the company was capital preservation with the company CEO Michael J. Saylor saying that the first bet on BTC was:

 “A dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”

The famed investor Paul Tudor Jones, the investment in Bitcoin futures in May by Tudor BVI, the money managers and corporations are swimming in cash and this could have been the reason for the given green light to make investments in BTC for the capital preservation properties. Jones’ approval provides cover to institutions to make such similar moves. There has yet to be large-scale migration to digital assets but the market’s response to MicroStrategy could show that betting on Bitcoin could be appealing to investors that never actually openly bet on BTC.