Mike Belshe, the CEO at BitGo, a Palo Alto, California-based digital asset trust and security firm offering a multi-signature Bitcoin (BTC) wallet service, recently noted that many companies are now going out of business due to challenges related to COVID-19.
Belshe points out that there doesn’t appear to be an end in sight, even after being six months into the pandemic. He believes that small businesses with leases will begin to default at this time, and the “paltry” $600 per week for each person of unemployment money will “look like chump change” when compared to what the government will have to spend to “prevent the next wave of carnage.”
Belshe claims or argues that the US government is “being forced to maintain lockdowns for political correctness, which will force them to print money even faster.”
“Institutional investors are flagging this and recognize the devaluation will make cash hard to hold. They’re looking for alternatives, and it comes down to Bitcoin and gold. If you don’t have some Bitcoin now, it is time to put at least 3% of your net worth into Bitcoin. This is the lowest risk, highest asymmetric upside investment you will likely see in your lifetime. Or stop the lockdown. But still get Bitcoin.”
On August 11, 2020, MicroStrategy Incorporated (Nasdaq: MSTR), a major independent publicly-traded business intelligence firm, revealed that it had acquired 21,454 bitcoins at “an aggregate purchase price of $250 million, inclusive of fees and expenses.”
The company said that it had adopted Bitcoin as a “primary reserve asset” as part of its capital allocation strategy which involved investing a significant amount of its holdings in alternative investments.
Michael J. Saylor, CEO, MicroStrategy Incorporated, explained that his firm’s investment in Bitcoin is part of its strategy that aims to “maximize long-term value for its shareholders.”
“This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
According to Saylor and his firm, Bitcoin may serve as “a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”
Bitcoin (BTC) is evolving from “tech stock growth behavior” to a mature store of value, according to a recent report from CoinShares.
Jay Hao, CEO at OKEx, one of the world’s largest cryptocurrency exchanges, has noted that the US dollar “drop” and the Bitcoin (BTC) surge recently occurred at the same time.
“The correlation between Bitcoin and US dollar, and gold and US dollar declined, while the correlation between Bitcoin and gold increased. The price reaction to this is that both gold and Bitcoin have seen skyrocketing against the backdrop of a falling US dollar index.”
It’s worth noting that Bitcoin had surged to nearly $20,000 in December 2017, but then crashed to below $3,500 by December 2018. Many industry participants, including Ari Paul from BlockTower Capital, lost millions of dollars after entering bullish long positions (in December 2017) that had forecast a $50,000 BTC price by December 2018.
Bitcoin and other crypto-assets remain a very high-risk investment.