MicroStrategy’s Bitcoin Treasury Exceeds Cash Balance by 80% of S&P 500 Non-Financial Companies September 15, 2021

MicroStrategy’s massive Bitcoin (BTC) holdings have exceeded what most S&P 500 companies keep in their vaults.

Publicly traded enterprise software company Nasdaq bought another 5,050 Bitcoin for about $ 242.9 million, bringing the value of its 114,042 BTC holdings to nearly $ 5.3 billion. That’s more than the 80% that S&P 500 non-financial companies keep in their vaults, according to data compiled by Bloomberg.

Increased corporate spending

MicroStrategy is making the purchase of Bitcoin its official corporate strategy in 2020, with prominent CEO Michael Saylor describing the move as a defensive measure against a potential US dollar devaluation. Companies like Tesla and Square later copied the strategy of replacing some of their cash reserves with Bitcoin.

On the flip side, companies with lower risk continue to build their cash holdings. In the second quarter, for example, non-financial companies in the S&P 500 increased their coffers by 12% year-on-year due to the escalating uncertainty caused by the COVID-19 pandemic.

Several companies – including General Electric, Ford, and Boeing – began issuing cash in the current third quarter. For example, in July, the S&P 500 non-financial corporations cut their dollar reserves by $ 30 billion, or 2% year over year.

At the same time, companies like Amazon and Alphabet (the parent company of Google) are still accumulating cash but are barely changing their total spending in dollars. Bloomberg data shows that U.S. companies’ total cash reserves fell from $ 1.55 trillion to $ 1.52 trillion as they acquired new businesses, repurchased and repurchased shares, and increased dividends.

Overall, the declining trend in cash holdings suggests that publicly traded companies are more comfortable spending their money, leading to expectations that the COVID-19 pandemic is coming to an end.

MSTR enables de facto Bitcoin exposure

MicroStrategy’s shares are up nearly 359% in the past 12 months, while on a stepping stone with Bitcoin, their value is up 314% over the same period.

With MSTR’s surge overtaking Bitcoin’s, some analysts believe that owning the stock, through its infrastructure, allows investors to have easier exposure to the benchmark crypto market.

“It’s no secret that MSTR is rated higher than NAV [net asset value] The Kingdom Capital analyst said:

“NS [clearest] The reason I can see it is that it is one of the few companies with a large market cap in the BTC space. “

For example, the Amplify Transformational Data Sharing ETF, which manages $ 1.2 billion worth of investments, gained 6.5% of the rate reported on the MSTR after defrauding the Grayscale Bitcoin Trust, the bitcoin investment vehicle prohibits it from receiving funds from certain funds and exchange-traded funds.

Likewise, the Siren Nasdaq NexGen Economy ETF has exposure to MSTR but not GBTC.

Related: MicroStrategy stock rises on MSTR, a bitcoin “proxy” for institutional investors

As a result, MicroStrategy and Bitcoin share prices are expected to trend in sync unless there are more crypto stocks available. The Kingdom Capital has:

“It seems that better vehicles for BTC securities are available to investors and as they become more accessible I expect some ETFs to reduce their MSTR exposure.”