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MicroStrategy’s bitcoin treasury holds more than 80% of S&P 500 non-financial companies in cash

MicroStrategy’s huge bitcoin (BTC) holdings have exceeded the value of S&P 500 companies held in their cash treasuries.

The Nasdaq-listed enterprise software firm bought an additional 5,050 bitcoins for approximately $242.9 million, bringing the value of its 114,042 BTC holdings to approximately $5.3 billion. This is more than 80% of non-financial S&P 500 companies, according to data compiled by Bloomberg.

Cash Spending Between Corporations

MicroStrategy called the move a hedge against a possible devaluation of the US dollar, with its noted CEO Michael Saylor to make bitcoin its official corporate strategy in 2020. Companies such as Tesla and Square later imitated the strategy of replacing a portion of the cash reserves with bitcoin.

On the other hand, firms with low risk appetite continued to increase their cash holdings. For example, in the second quarter, non-financial companies on the S&P 500 increased their coffers by 12% compared to a year ago due to rising uncertainty caused by the COVID-19 pandemic.

Cash holdings by non-financial S&P 500 companies in recent quarters. Source: Bloomberg

Some of those firms — including General Electric, Ford and Boeing — began spending cash during the current third quarter. For example, in July, non-financial S&P 500 companies decreased their dollar reserves by $30 billion, or 2%, from a year earlier.

At the same time, companies such as Amazon and Alphabet (Google’s parent company) were still hoarding cash, but did little to replace the total dollar spend. Bloomberg data shows the total cash reserves with United States corporations fell from $1.55 trillion to $1.52 trillion as they acquired new businesses, bought back shares and increased dividends.

Overall, the declining cash holding trend suggests that publicly traded companies have become more comfortable spending their money, with hopes that the COVID-19 pandemic is almost over.

MSTR Really Gives Bitcoin Exposure

In lockstep with bitcoin, MicroStrategy’s shares have risen nearly 359% over the past 12 months, with its value up 314% over the same period.

As the MSTR appreciation has outpaced bitcoin’s price rise, some analysts believe that owning the shares gives investors easier access to the benchmark cryptocurrency market through traditional infrastructure.

Microstrategy vs Bitcoin vs Nasdaq. Source: Econometrics

“It is no secret that MSTR is being valued more than NAV [net asset value] The number of coins currently owned, and I don’t think investors are buying it for the old business,” said analyst Kingdom Capital.

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

For example, the Amplify Transformational Data Sharing ETF, which manages $1.2 billion in investments, has gained 6.5% exposure to MSTR after trading over-the-counter to Grayscale Bitcoin Trust, the major bitcoin investment vehicle in the US, which prohibits it. By receiving capital from certain funds and exchange-traded funds.

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

RELATED: MicroStrategy Stock Flips Bullishly With MSTR, a Bitcoin ‘Proxy’ for Institutional Investors

As a result, the microstrategy stock and bitcoin prices are expected to adjust until more crypto stocks become available. Weight of Kingdom Capital:

“It appears that there are better vehicles available to investors for BTC equities, and as they become more widely accessible, I expect some ETFs to reduce their MSTR exposure.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should do your own research when making a decision.

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