MSTR had a BGU yesterday. It made headline news when it bought $425 million in bitcoin. With a market cap of only $1.8B and annual sales of about $450M, along with bitcoin breaking out as numerous metrics favor bitcoin to reach old highs of $20,000 sometime in the first half of next year, its bitcoin holdings put MSTR in a strong position. Given the size of its investment relative to its total size as a company, some have even speculated that MSTR could be used as a bitcoin ETF of sorts.
MSTR has opened the floodgates into corporate treasuries as the total now owned by corporations in the U.S. just passed $10 billion when it was just under a billion last month. It is the attempt of corporations with fiat-based warchests to stave off sinking fiat. What happens when about $5T of cash sitting in public company corporate treasuries and the $8.5T sitting in sovereign wealth funds realize they too need to be invested in bitcoin?
Keep in mind the stimulus package could be further delayed. This, along with election uncertainty, could cause sharp pullbacks in the general markets, so if buying anything, position size accordingly and always keep your stops tight.
Buyable Gap Up - MSTR 10-22-20
| Published: | 22 Oct 2020 09:19 ET |
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