MicroStrategy Purchases 21.4K Bitcoin as Capital Allocation Strategy

Vandana  |  Aug 11, 2020

MicroStrategy, a huge publicly-traded intelligence company that is listed on Nasdaq, has become the first company of this type to buy Bitcoin as a capital allocation strategy. On Tuesday, i.e., August 11, the firm has announced that it has purchased 21,454 bitcoins, which are worth around $250 million.

The firm has specified that this purchase has been made using the two-pronged capital allocation strategy, which has been announced by the firm earlier. The primary purpose of this plan announced by the firm on July 28 was to avoid inflation. 

MicroStrategy aims to increase long-term value for shareholders

Michael J. Saylor, CEO of MicroStrategy, has said that the firm has invested in Bitcoin as a part of its new capital allocation strategy. Through this allocation strategy, the firm aims towards increasing the long-term value for its shareholders. 

This step is also indicating the firm's belief in Bitcoin, which is the largest and widely adopted cryptocurrency across the world. The firm also believes Bitcoin to be a highly reliable store of value and quite an attractive investment asset among all. It has also been seen that Bitcoin is having the potential for long-term appreciation instead of holding cash. 

Observing distinctive properties of Bitcoin

Through this step of buying Bitcoin, it has been seen that MicroStrategy is observing the distinctive properties of Bitcoin. This has made the firm believe that Bitcoin is that currency which has proved to be a hedge against inflation. Along with this, it also provides a way to earn huge returns on their investments. This has not been revealed yet whether the firm has bought these Bitcoins from any particular crypto exchange or the OTC trading desk. Now, this step by the firm is going to be among the significant step towards its capital allocation strategy also. 

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