2020 is shaping as the year when big money buys into Bitcoin. First Paul Tudor Jones and now a public billion dollar US company - MicroStrategy.

For me, Paul Tudor Jones buying in, is not a news. Kind of expected. Fund manager who looks for diversification and possible huge appreciation. He threw a few percent of his portfolio in Bitcoin. I was expecting something like from a professional money manager. I think everyone was. MicroStrategy purchase is a whole different thing, though. Let me throw a few random thoughts around that:

  • MicroStrategy converts a sizable cash position in Bitcoin and will use Bitcoin as reserve instead of cash. Hundreds of millions of dollars worth of Bitcoin. If that was a private company, that would be normal - “The CEO went in the Bitcoin rabbit hole and bought in”. However, this is public billion dollar company with shareholders, board of directors and many stakeholders. Getting such a decision through is not easy task. Everyone, who has worked in a bigger company (especially public one) knows such a weird decision getting through is huge.

  • All of a sudden MicroStrategy becomes an easy vehicle for Bitcoin exposure. If Bitcoin appreciates 2-3-5-10 times and more, company holdings of Bitcoin will outgrow the company value. So for many people it will be much easier to buy into MicroStrategy stock instead of Bitcoin to gain the exposure.

  • It is still weird how you convince shareholders that you convert hundreds of millions of dollars on the balance sheet into Bitcoin. Many of them bought the stock because they wanted a chunk of a software company, not Bitcoin. I attribute this to 2 things: (1) the CEO is the founder and is CEO for 20+ years so he has big influence and (2) this is viewed as something that will draw interest to the company and appreciate the share.

  • A lot of Bitcoins went from weak hands to strong hands. Bullish.

  • The big implication is that other cash rich public companies will start getting shareholder questions. “MicroStrategy did it, why don’t we?”. I won’t be very surprised if some follow suit, especially if that drives interest to MicroStrategy stock.

  • One step further from government ban. When big money get significant exposure, bye bye government ban fears. turns out that a lot of people perceive this as a big risk. Imagine what happens to price if all of a sudden this risk goes to almost zero.

  • This looks like a potential Amazon-like flywheel. Some companies buy Bitcoin. Bitcoin price goes up due to demand (and fixed supply). That makes their shares go up. Others follow suit as they have cash with negative yield and want piece of the pie. As many companies own Bitcoin, it is impossible to ban due to huge lobby. Risks go down, price goes up. Repeat.

This may look crazy but if you told me in 2016 that US public billion dollar company will buy Bitcoin worth hundreds of millions of USD, I would have laughed. Nothing is impossible. I saw Bitcoin go from “drug dealer money”, going through “scam” and hard forks only to be held by some big wall street money. This is the money of the rebels. And when you arm the rebels, they always win.

Thanks for reading!