MicroStrategy CEO Michael Saylor reveals how the company acquired a large amount of Bitcoins in bulk at once. Based on his latest tweet, Saylor hinted that instead of using a crypto exchange, the company purchased Bitcoins via an Over-the-Counter (OTC) trading desk and moved to store them in cold-storage.
Saylor hints about saving a huge amount of on-chain transaction fees by making a majority purchase off-chain with Over-The-Counter (OTC) transactions. He seems to have preferred OTC markets that execute trades through a private dealer network as opposed to a crypto exchange in which counter-parties expose their offers to the parties in public.
This allows big investors to buy a large number of assets without alerting the market. Bitcoin, a highly valuable asset, is normally listed on OTC markets.
On a podcast with Anthony Pompliano, Morgan Creek digital cofounder, Saylor states that he cannot give exact details of the acquisition process because of security issues. However, he shared some important insights concerning what big investors (institutional investors) should do if they want to buy a lump sum of Bitcoin. Investors would have to look at security issues, technology issues, and many others.
He said the big investors would, therefore, need institutional-grade custody solutions to securely store crypto assets with minimized risk of loss or theft. Investors would also need to have a right team and build a good relationship with the team. In other words, crypto custodians offer critically important services that investors need.
Bitcoin as A Hedge
MicroStrategy, the Nasdaq-listed business intelligence firm, has become the first publicly-traded company to purchase Bitcoin as a part of its capital allocation strategy. On August 11, the company announced that it has bought 21,454 Bitcoins (worth over $250 million). The company made waves by adopting Bitcoin as its reserve asset to hedge itself from inflation.
On Tuesday, September 15, the company announced that it purchased another 16,796 Bitcoins, adding to the 21,454 it bought last month.
It has been projected that many companies will follow MicroStrategy’s style as the world’s largest cryptocurrency is becoming increasingly scarcer.
While MicroStrategy continues to be in love with Bitcoin and what the digital gold has to offer, not all investors have developed such a kind of affinity. Dave Portnoy was a recent market entrant but soon had a bad experience after the crypto asset he bought crashed in the following days. Just mere weeks after making a high-profile entrance into crypto markets, Portnoy twitted that he has exited crypto.
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