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Experts see Microsoft’s consideration of investing in bitcoin as a sign of growing acceptance among public companies to use cryptocurrency as a diversification strategy to maintain market dominance and protect shareholder value.
Microsoft Proposal Reflects Shifting Strategy of Corporate Treasury Teams
Reports suggesting Microsoft might use some of its cash reserves to acquire BTC indicate a growing trend of public companies viewing it as a strategy to maintain market dominance and protect shareholder value, experts argue. They point to BTC’s outperformance of other asset classes over the past decade as a reason for its appeal, especially with inflation wreaking havoc in even previously stable economies.
While Microsoft’s board has already urged shareholders to vote against a proposal to convert at least 1% of the company’s assets to BTC, the mere discussion of the idea – despite co-founder Bill Gates’ previous criticism of the cryptocurrency – has generated interest among BTC proponents.
Daniel Cawrey, chief strategy officer at Tonkeeper, told Bitcoin.com News that the discussion within Microsoft’s board, even with a recommendation against the proposal, signifies progress for BTC’s acceptance as a diversification strategy within public companies.
“It’s noteworthy that Microsoft’s board is recommending against this idea,” Cawrey said. “However, the fact that some Microsoft stakeholders advocate for this strategy suggests it’s at least being considered in boardrooms. This is a positive development for bitcoin as a diversification tool, as it’s sparking spirited debate – which is great.”
Echoing similar sentiments, Nate Holiday, co-founder and CEO of Space and Time, said the proposal, if passed, would not be Microsoft’s first investment in Web3. According to Holiday, Microsoft’s “robust” investment and treasury management team has already demonstrated its willingness to bet on Web3 by investing in his company in 2022.
Microsoft Unlikely to Convert All Cash into Bitcoin
While the Microsoft proposal to add Bitcoin to the treasury may or may not be approved, Holiday anticipates that more listed companies will invest in Bitcoin or Web3.
Meanwhile, both experts agree that Microsoft’s treasury team is unlikely to invest all its cash in BTC at once, which could potentially impact prices. Instead, they believe the team, or any other corporate treasury team, would adopt a more gradual approach.
“Treasury and investment teams are sophisticated professionals. The idea that $76 billion would be poured into an asset all at once seems unlikely. Corporations have a long-term view of creating shareholder value and manage their investments over a longer time horizon than the market typically anticipates.”
Even if Microsoft were to use all its cash to acquire BTC, the impact on the market would be less significant than in the past. Cawrey noted that the crypto market is now more mature and liquid than in 2017-18.
Furthermore, Microsoft or any corporation seeking to acquire a significant amount of Bitcoin has various options, including market makers, over-the-counter (OTC) providers, and exchange-traded funds (ETFs). Acquiring BTC through these intermediaries would significantly reduce the likelihood of one buyer’s purchases moving the market.