The cryptocurrency Bitcoin now also has an influence on the share prices of many companies. The movement of the cyber currency correlates, especially with tech companies. MicroStrategy CEO Saylor now predicts a further rise, which could also boost many a share price.
After the largest cryptocurrency by market capitalisation Bitcoin had a rather lukewarm 2020, also because of the corona crisis, 2021 seems to become a super-year for BTC and other digital assets. Only on 10 November, BTC reached a new all-time high of 68,789.63 US dollars, according to data from CoinMarketCap. But it was not only Bitcoin and other cryptos that went up because many shares now correlate – for multiple reasons – with the price of the cryptocurrency and have thus been able to make substantial price gains so far.
The MicroStrategy share
Take Michael Saylor’s company, MicroStrategy, for example. Over the year, the share price rose to 690.02 US dollars (closing price on 22 November 2021). A 79.33 per cent increase for the tech share. For the third quarter of 2021, MicroStrategy reported total revenues of only 128 million US dollars – an increase of merely 0.5 per cent compared to the same quarter of the year 2020.
However, the tech company bought an additional 9,000 Bitcoin, so MicroStrategy now holds 114,042 BTC (as of 30 September 2021). This makes the group under CEO and perma Bitcoin bull Saylor the world’s largest listed Bitcoin owner. By comparison, e-car pioneer Tesla’s media-savvy Bitcoin investment in February 2021 was US$1.5 billion in Bitcoin. Calculated at the BTC price at the time (around 35,000 US dollars), Tesla is, therefore, likely to have held fewer than 43,000 coins. Like the MicroStrategy share, the Tesla share is thus also influenced by the movements of the cryptocurrency. Speaking to CNBC, Saylor said: “From our perspective, Bitcoin will remain volatile because it’s connected to the entire cryptocurrency market, and it’s new, but it’s going to go up forever.”
The Tesla share
If one compares the charts of the two assets – the Tesla share and Bitcoin – no clear correlation becomes apparent. However, some movements in the BTC price can be traced back to tweets by Tesla CEO Elon Musk. The information alone that Tesla was investing in Bitcoin and wanted to accept payments in the digital currency caused the price to jump. After Musk rowed back on BTC payments and drew attention to the problem that Bitcoin is harmful to the environment, the cryptocurrency fell significantly. However, as some chart analysts pointed out, Elon Musk may have tweeted his thoughts in correlation to technical indicators and charts pointing to BTC’s whopping correction.
The enterprising tech billionaire also acquired altcoins, such as Dogecoin, moving with his statements and tweets. In the third quarter of the year 2021, the e-car maker reported 1.26 billion US dollars in “digital assets” – i.e. the net value of Bitcoins held – on its balance sheet. Thus, Tesla’s balance sheet is also benefiting from the rising Bitcoin price.
The Marathon Digital share
Marathon Digital is not very well known to many investors. The US company specialises in mining cryptocurrency – especially Bitcoin. With a market capitalisation of 5.09 billion US dollars (as of the closing price on 22 November 2021), the company cannot compete with big players like Tesla.
However, Bitcoin mining is Marathon Digital’s main business. According to its latest quarterly report, the group produced 1,252.4 Bitcoin in Q3 2021. This means that Marathon Digital now owns a total of 7,035 Bitcoin. Marathon Digital is a “Bitcoin producer” and can benefit directly from rising prices in the broadest sense. This year alone, Marathon Digital shares gained around 374 per cent on the NASDAQ.
The Square share
Square also joins the ranks of Bitcoin holders. The company owned 8,027 coins in the third quarter. CEO and co-founder Jack Dorsey has long been a supporter of the most popular cryptocurrency. However, the payment service provider does not want to profit from the development by owning Bitcoin and promoting its spread and adaptation. Among other things, the company intends to offer its customers a hardware wallet for safekeeping digital assets.
In addition, Dorsey is planning his own decentralised Bitcoin exchange via a Square business arm. Thus, the Square share not only benefits from rising Bitcoin prices, but the spread and use of Bitcoin can also have a positive impact on Square’s balance sheet in the future.