When it came to crypto adoption, there was no doubt that 2020 was a stellar year. Companies went into the industry en masse looking for a way to save themselves from the coronavirus' impacts.
In the past, periods of economic crises have seen assets shift base a lot. However, the primary destination for companies used to be government bonds or assets like gold and oil. However, these reserves weren't doing so well last year. Investors were left with the dilemma of where to go.
Institutional Action Rocks the Bitcoin Market
In came Bitcoin.
Bitcoin was fresh off an incredible 2019, where it was named the world's best-performing asset for 2019. While some investors were skeptical about Bitcoin since it fell in March following the crash in oil prices and the coronavirus hitting major economies, it bounced back quickly, restoring confidence in its ability to wait out the storm.
The first half of the year was a pretty silent one for Bitcoin all in all, with the most notable event being the asset's halving. However, institutions soon came rushing in H2, and this was where MicroStrategy hit the mark.
Big Money at MicroStrategy
MicroStrategy is a business intelligence firm based out of Virginia. The company has been trading on the stock exchange for a while now, reaping regular business operations benefits. However, like many large firms, it decided to move into the Bitcoin space following a traditional market crash.
MicroStrategy began its Bitcoin purchasing spree in August. At the time, the company announced that it converted its assets to the Bitcoin standard and would purchase $250 million worth of the leading cryptocurrency. It is worth noting that Bitcoin traded at less than $10,000 at this point, according to data from CoinMarketCap.
Weeks later, MicroStrategy added another $175 million in Bitcoin, bringing its total purchase to $425 million.
Over the next few months, Bitcoin began a considerable rally that saw it test the previous all-time high of $19,600. Such a rally immediately benefited MicroStrategy, with its significant holdings ballooning in value.
Still, it didn't stop there. In December, the firm announced that it raised $650 million through convertible senior notes. As its announcement explained, the firm planned to use the raised funds to purchase Bitcoin and increase its exposure to the leading cryptocurrency.
"MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending identification of working capital needs and other general corporate purposes."
In truth, several large firms had made considerable Bitcoin investments. Square bought $50 million worth of it in September, while British investment firm Ruffer Investments committed $750 million worth to the asset as well. However, no one purchased even close to what MicroStrategy did.
Grooming More Companies to do the Same
When considering MicroStrategy's affinity for Bitcoin, it is easy to stay focused on the numbers and how much the company has purchased over the past few months. However, the firm has also done a great deal to get people to buy Bitcoin as well.
Ever since Bitcoin burst onto the stage years ago, one of the primary considerations for its proponents has been widespread adoption. After all, the more people own crypto, the higher its value becomes. Well, MicroStrategy has essentially done enough to boost adoption than many crypto-facing firms, in fact.
Instead of just holding Bitcoin, MicroStrategy has done significant work to tout it as well. Last December, when Bitcoin broke through the $20,000 barrier and was on its way to $25,000, Tesla CEO Elon Musk took to Twitter to share that he had been attracted to the asset and its incredible performance.
Come Over, Elon
Not one to miss an opportunity, Saylor immediately asked Musk to possibly get in on the space and convert Tesla shares into Bitcoin. When Musk engaged and asked if it was possible to acquire so much Bitcoin without causing significant market disruption, Saylor offered to send his "playbook" to explain how MicroStrategy managed to make such a considerable Bitcoin purchase.
It has since been known that top crypto exchange Cooinbase helped with the purchase through its institutional custody service, Coinbase Custody.
It is unclear whether Saylor and Musk have had any private meetings about the possibility of buying Bitcoin. However, earlier this week, Tesla announced that it had bought $1.5 billion worth of the leading cryptocurrency.
In a filing with the SEC, Tesla explained that it had made the Bitcoin purchase as part of a broader mission to expand its asset reserves beyond just cash. The car manufacturer added that along with holding Bitcoin, it would also accept the asset in the future as a payment method for its products. Every Bitcoin that Tesla receives won't be converted into cash - instead, the firm will simply keep it and add it to its reserves.
Despite the ambiguity surrounding Saylor's role in encouraging Tesla, the CEO has been instrumental in other parts. Last month, he and MicroStrategy announced Bitcoin for Corporations - a two-day workshop that would engage any company looking to buy Bitcoin and add it to their reserves as well.
Essentially, MicroStrategy was holding a conference for companies looking to copy it. The firm was sharing its playbook. Bitcoin for Corporations had sessions on just about everything crypto-related, including ta compliance, asset rebalancing, and much more.
Bitcoin for Corporations
In the meantime, the company didn't take its foot off the gas when it came to purchases. Following its success with Bitcoin investments, MicroStrategy saw its holdings balloon into billions when Bitcoin hit its previous all-time high of $42,000.
However, the asset's volatility was in play once more as it crashed and went down into the low $30,000s. Sensing an opportunity, the business intelligence firm bought another $10 million worth of BTC, saying in an announcement that it planned to still make more purchases.
The decision already paid off. Thanks to Tesla's purchase - an event which MicroStrategy and Saylor most likely had a hand in - Bitcoin has comfortably broken the $40,000 barrier and is now looking to test $50,000. That's more money for the Virginia-based firm on its own.
MicroStrategy has become one of the most influential names in the crypto space within a few months with its efforts. The company is a whale, holding more Bitcoin than the U.S. government and several other major global entities. If it continues to snap up more of the asset, there's no telling where it could reach.