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The CEO of MicroStrategy, a public traded firm that has been in the financial intelligence sector for the past 30 years, has revealed reasons the firm converted its $250 million holdings into Bitcoin, thereby acquiring 21,454 bitcoins.
The company says it made the investment in fulfillment of the previous announcement in its Q1, 2020 financial reports, where it mentioned a “two-pronged capital allocation strategy”, geared towards maximizing long term value for shareholders.
At first, MicroStrategy worked on the first prong and returned parts of its leftover cash to shareholders. During this period, the firm launched $250 million cash tender offer.
The acquisition of 21,454 bitcoins, makes MicroStrategy fulfill its second prong where it promised to invest around $250 million in either a single or many alternative investments or assets.
Why MicroStrategy Invested $250 Million in Bitcoin
CEO MicroStrategy, said Michael J. Saylor, mentions that the investment indicates the firm’s credence in Bitcoin, “as the world’s most widely-adopted cryptocurrency.”
The firm further reveals that it identifies Bitcoin as a legitimate investment asset that is superior to cash.
Saylor notes that MicroStrategy’s decision to invest in Bitcoin was largely fueled by the macro factors destabilizing the economic and business landscape, thereby creating risks that require a holistic approach.
Global Politics and COVID-19
He mentioned that COVID-19, global politics, and some other pertinent issues, made the firm seek solace in cryptocurrency.
The CEO of MicroStrategy, said, in the long run, government financial stimulus, like quantitative easing which has been adopted globally, will weightily affect fiat currencies and some other traditional assets.
After observing the present situation, MicroStrategy says it decided to invest in Bitcoin to circumvent the moribund economic situation of the future.
Bitcoin Forms Strong Support above $11,500, Targets $12,500 Resistance
Since the end of July, Bitcoin has been trending steadily on the upside part of the market with a strong rally signaling more bullish forces.
The rise above $10,000 psychological resistance was quite a big one for the leading digital asset, however, there are still quite a number of obstacles ahead for the cryptocurrency to break even.
At present, Bitcoin seems to have formed strong support above $11,500 as the cryptocurrency tested this region lately and bounced back sharply.
The $11,500 point stands as a neckline region for BTC and analysts have proclaimed that staying above this point makes Bitcoin relatively bullish.
In another vein, the cryptocurrency tested the $12,080 level earlier but went back to $11,700 hours later, making the former a resistance point to Bitcoin.
According to the 4-hourly chart of the cryptocurrency, BTC targets accelerating beyond the $12,000 level as it remains above the 100 hourly SMA, hence $12,080 stands as a major resistance for Bitcoin.
Once Bitcoin reclaims $12,000, the cryptocurrency can easily rise further to $12,500, but we should expect a retracement to $11,700 level before another bullish rally.