After acquiring the digital currency, one of the biggest U.S.-based investment banks has made a multi-million dollar bet on Bitcoin.
And it might just pay off in this business.
The approximately $500 million investment in Microstrategy Inc. by Morgan Stanley may come as a surprise to many. But not the veteran investor, Ben Miller.
That’s because betting on the firm is also a bet on Bitcoin in its current form.
Buy MSTR, Purchase Bitcoin
One of the first firms to start converting heaps of cash to Bitcoin was Microstrategy Inc.
The business intelligence company converted 100 percent of its cash balance to BTC by October 2020, for a total of $475 million. Later, $650 million in senior convertible notes was received by Microstrategy to buy even more.
The American publicly traded corporation has made a leveraged bet on Bitcoin and currently owns BTC above $2.8 billion.
Before 2020, such a move would have been derided by investment gurus and hedge funds. In the pandemic-ridden year, however, things changed dramatically.
And several brand name investors are following suit, with Microstrategy leading the way.
Morgan Stanley indirectly bet on Bitcoin after purchasing 792,627 Microstrategy shares (MSTR) before Dec. 31, representing 10 percent of the company, according to a Jan. 9 SEC filing.
The investment in a “No-Brainer.”
Despite the decrease in job risk, the asset’s notorious volatility is still concerned with banks and larger companies. According to experts, this could soon change, however.
As Bitcoin is still in its early stages, price growth is profitable for lower volatility in the future, explained Ben Miller, a co-founder at Miller Value Partners. Miller went as far as to suggest that the higher it goes, “[Bitcoin] gets less risky, the higher it goes.”
He pointed out that investing in Bitcoin using a small portion of individuals’ or companies’ cash balance is a no-brainer in the current economic climate. Interest rates are at zero, although the probability of long-term inflation is 2%. Verified him:
“If you look at cash, it is a guaranteed loser by at least 2% a year.”
With a total market capitalization of $749 billion, the cryptocurrency is currently trading at $40,311.