Big Business is In!

August 17, 2020

Quite a bit has happened over the past month, far too much to cram in to one email, so I’m going to just pull out a few highlights which are critical that you may have missed.

The short story is that big business is now seriously investing into crypto assets, however let me begin by stating that the bull is running.  We’ve been predicting this for some time now and major levels of resistance have broken over the past month, with Bitcoin and other crypto assets surging to yearly highs.  We believe this is just the beginning, and there is still plenty of opportunity to benefit from this expected historic run. We’re not the only ones who are bullish.

MICROSTRATEGY MAKES $250M INVESTMENT INTO BITCOIN AS PRIMARY TREASURY RESERVE ASSET 

MicroStrategy, a Nasdaq traded company with market cap of approximately $1.4 billion, just made a major strategic move and invested $250 Million into Bitcoin, calling it “superior to cash.”  Bitcoin is now the principal holding in their treasury reserve strategy.  CEO, Michael Saylor is quoted as saying:

“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.” 

Let’s think about this for a moment.  A company that has been around for a little over thirty years and serves the fortune 500 put a massive portion of their treasury into Bitcoin, citing many of the reasons that we have discussed including being a hedge against inflation in the midst of our massive quantitative easing. This is a huge vote of confidence for a company that generates top line of approximately $500M/year as they certainly don’t want their reserves at risk.  We’ve been expecting big price leaps in Bitcoin. It would seem MicroStrategy believes this as well and has literally “bet the company” on it.  You can read a summary here, and the full press release here.

JP MORGAN GETS IN CRYPTO GAME WITH $20M ETHEREUM INVESTMENT 

Bitcoin didn’t get all of the limelight this month.  JP Morgan, who’s CEO Jamie Diamond famously stated in 2017 that Bitcoin was a fraud, has had a full reversal.  We know they have been an early player in crypto asset adoption by pioneering their own stablecoin.  They are now leading a $50M raise for ConsenSys, the professional services and development arm of Ethereum, reportedly pledging $20M to the effort.  This not only bolsters JP Morgan’s stablecoin initiative, as it is built on the Ethereum network, it shows a significant – and public – vote of confidence in the Ethereum platform.

“CRYPTO MOM” HESTER PEIRCE TO SERVE AS SEC COMMISSIONER UNTIL 2025 

So, where does Uncle Sam fit into all of this?  Well, Hester Peirce, affectionately dubbed “Crypto Mom” because of her generally favorable outlook on crypt assets, has just had her term as SEC Commissioner extended until 2025, with senate vote affirming this on August 6.  This is a perhaps subtle but important factor when considering the world of crypto assets, as government advocacy will be essential, and Ms. Peirce has previously advocated for cryptocurrency often in contrary to committees and regulatory bodies in the government.  She is a progressive voice who, along with Brian Brooks, the acting comptroller of currency and strong crypto asset advocate, shows that the US government is warming to this new asset class.  This bodes well for the future.

IN CLOSING

Wall Street is in. Big business is in. The government is in.  The crypto asset bulls are running.

While many still look at the world of Bitcoin and other crypto assets as voodoo or with a sense of distrust, the reality is that the markets are speaking.  As we continue in the pandemic with an uncertain future, greater and greater changes in monetary policy in both public and private sectors is expected.  Crypto assets are the antidote.  We’ve been touting this for a while now, and now it’s happening.

If you would like additional information on how to participate in this technological revolution, we’re here for you and, as always, please reach out with any questions, stay safe, and we’ll continue to Decrypt: Crypto for you!

About the author James Diorio

James is the Principal and Chief Executive Officer of Tradecraft Capital.