MicroStrategy, Square Bought Bitcoin High, Then the Price Fell

Some think bitcoin is too volatile to be a popular treasury reserve asset. MicroStrategy and Square seem to be in it for the long haul.

AccessTimeIconFeb 24, 2021 at 5:42 p.m. UTC
Updated Sep 14, 2021 at 12:16 p.m. UTC
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At stake

A big day for bitcoin balance sheets

MicroStrategy purchased another $1.026 billion in bitcoin Wednesday, bringing its total hoard to 90,531 BTC, worth some $4.78 billion. The business intelligence company, which is now better known for its bitcoin evangelism than its actual products, issued zero-interest debt to finance the purchase – in some sense making it a de facto bitcoin exchange-traded fund. CoinDesk’s Danny Nelson gives an overview of CEO Michael Saylor’s increasingly bombastic bitcoin pitch.

Square also bought more bitcoin, paying approximately $170 million for 3,318 BTC. It executed the deal with an average price per coin of $51,235.70, meaning the investment is in the red. It should be said, MicroStrategy’s most recent BTC allocation is also worth less than the dollars invested.

Why does this matter? Square putting 5% of its balance sheet into bitcoin is a huge vote of confidence for the asset. However, as CoinDesk’s Nathan DiCamillo notes, buying at market tops could prove JPMorgan’s theory that few non-crypto companies are likely to follow in MicroStrategy, Telsa or Square's footsteps given bitcoin’s volatility.

Still, as Square proved, there are ways to make money with bitcoin that don’t involve direct investment. The revenue it made from selling bitcoin on Cash App swelled to $4.57 billion in 2020, clocking $97 million in gross profit.

Other stories

Alameda Research is leading a $40 million investment into Oxygen, a Solana-based platform that aims to become a Robinhood for decentralized finance (DeFi). Multicoin, CoinDesk sister company Genesis Capital and CMS joined the round. The platform will be integrated into the Google Maps alternative Maps.me, in which Alameda has previously invested. CoinDesk’s Ian Allison dives in.

CoinShares has launched a new Ethereum exchange-traded product (ETP), with each share backed by .03 ETH. The EPT will trade on the Swiss SIX exchange and already has around $75 million in assets under management (AUM).

NFTs are having a moment and causing confusion as to what exactly these tokens are. CoinDesk’s Brady Dale explains the tech behind the trend. People have paid $600,000 for a Nyan Cat NFT and over $1 million for a CryptoPunk, but in most cases, the image or media being represented doesn’t live on the blockchain – meaning those files could be taken offline. Stakeholders are working on solutions to the issue, though the industry has yet to settle on best practices.

Canadian bank VersaBank will soon launch a stablecoin for commercial use. In what’s claimed as a first, the VCAD stablecoin is issued and backed by deposits at a North American bank and will be redeemable for Canadian dollars.

Meanwhile, the East Caribbean Central Bank has executed the first retail transaction for its “DCash” digital currency. The transactions took place in a supermarket in Grenada on Feb. 12, and could eventually see use across the Eastern Caribbean Currency Union trading bloc. Digital finance startup Bitt is a technology provider for the project.

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