A couple of weeks ago something unprecedented happened. Microstrategy — a $1 billion+ publicly traded company — switched $250 million of its dollar reserves into bitcoin.
Here’s an excerpt from a Coindesk report, which I strongly recommend reading.
“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,” said CEO Michael J. Saylor.
To say this is unprecedented is an understatement. But the stock market seems to like it. Microstrategy (MSTR) shares are up from around $120 at time of the announcement to more than $144 today.
I think we will see more of this in the future. But I suspect more companies will switch out of government bonds and into gold than bitcoin (at first). Why wouldn’t a big company with billions of dollars in Treasuries switch at least a portion to gold? The bonds won’t pay anything after inflation. At least gold has the potential to outperform inflation.
Eventually, I do believe that bitcoin will become popular as a reserve asset. But I think we’re still a ways off from it being stable enough to be a true reserve asset. For now, it’s a great speculative bet. And the more companies that make moves like Microstrategy, the less speculative it will be.