Institutional Threat: How MicroStrategy Purchases Affect Bitcoin (BTC) Decentralization
Date: 2023-07-02 Author: Karina Ziganova Categories: BLOCKCHAIN
The scope and implications of MicroStrategy's recent acquisitions of Bitcoin (BTC) have sparked heated debate in traditional financial and cryptocurrency circles.
Members of the crypto community are wondering whether the large-scale purchases of Michael Saylor's company will affect the decentralization of the main cryptocurrency.
MicroStrategy is betting big on Bitcoin
In 2020, the software company led by Michael Saylor adopted an unorthodox balance sheet strategy, replacing traditional cash reserves with Bitcoin.
The recent purchase of 12,333 BTC at an average price of $28,136 confirms MicroStrategy's bullish stance on cryptocurrencies. Active buying of coins has made MicroStrategy one of the world's largest institutional holders of bitcoin. Currently, the company's balance sheet is 152,333 coins - about 0.81% of the available supply.
This level of concentration of the asset in one hand naturally raises questions about the possible centralization of the cryptocurrency and the manipulation of its price.
Michael Saylor's purchases affect the price of BTC
The MicroStrategy investment strategy, conceived as a hedge against inflation and fiat depreciation, seems to revolve around the "energy currency" paradigm.
The concept, originally proposed by American industrial titan Henry Ford in 1921, involves backing up the currency with "units of energy," creating a new monetary standard. In Ford's view, the currency standard was resistant to scrutiny by any international banking group.
This aspiration echoes Bitcoin's philosophy, which is why Saylor remains optimistic about its long-term value. However, the businessman's unshakable conviction in cryptocurrency can play a cruel joke with him.
"MicroStrategy's buy announcements are typically followed by short-term price action. This is how the market perceives the fact that a certain liquidity on the part of buyers has left it, "comments K33 analyst Vetle Lunde.
