Some top companies in the S&P 500 index reached a high peak in their cash holdings due to the pandemic crisis. Meanwhile, MicroStrategy has been investing in Bitcoin.
The Bitcoin treasury of MicroStrategy is worth far more than the cash holdings of most S&P 500 companies.
MicroStrategy, the publicly traded software company and one of the most relevant institutional Bitcoin whales worldwide, recently purchased 5,050 bitcoins for a sum of $ 242.9 million.
The investment increased the bitcoin treasury of the company to a total of 114,042 BTC, currently valued at a record high of more than $ 5 billion.
According to data compiled by Bloomberg, this number is more than the amount of cash currently held by 80% of non-financial companies in the S&P 500, including big-name companies like Starbucks Corp, Verizon Communications Inc., and Home. Depot Inc.
Another aspect to consider is that the Standard & Poor’s 500 index, better known as the S&P 500, is one of the most relevant stock indices in the United States of America.
This index has the 500 most representative and liquid stocks of the most relevant industries in the North American market. The index currently accounts for 400 industrial stocks, 40 financial stocks, 40 public service stocks, and 20 transportation stocks.
More Bitcoins than Cash Reserves
The latest bitcoin purchase of MicroStrategy is part of a company investment strategy led by CEO Michael Saylor. Since last year, the business software firm has been actively acquiring Bitcoin with its cash reserve as a strategy to protect itself from a possible devaluation of the US dollar.
Other prominent companies, such as Square and Tesla, have also copied this investment strategy to add bitcoins to their treasuries by changing their cash balance. But not all have opted for such a risky strategy.
Instead, most US companies have chosen to increase their cash stock in the face of the uncertainty generated by the Covid-19 pandemic last year.
Jeff Windau, the senior analyst at Edward Jones, said in an interview with Bloomberg that a year ago, during the tormenting moments of the pandemic, everyone was trying to strengthen their balance sheets.
During the second quarter, non-financial companies in the S&P 500 reached a high peak in their treasuries by 12%. Amazon.com Inc., Alphabet Inc., Google’s parent company, and American Airlines Group were among the group of companies that revealed the dollar gains.
This trend among large companies has begun to change in recent months due to the recovery of the health and economic situation worldwide.
According to Bloomberg, in July, non-financial companies on the S&P 500 cut their dollar reserves by $ 30 billion, or 2%, from a year earlier.
MicroStrategy and Bitcoin Stocks
Companies like Amazon and Alphabet continue to accumulate cash. Bloomberg data highlights that total cash reserves held by US corporations fell to $ 1.52 trillion from $ 1.55 trillion as they acquired new businesses, bought back shares, and increased dividends.
Meanwhile, the Bitcoin investment strategy that MicroStrategy applied has brought many benefits to the stock. The current shares of MicroStrategy have reached a high peak of more than 350% in the last year, reflecting the gains in Bitcoin.
By: Jenson Nuñez
