- Microsoft shareholders rejected Bitcoin investment due to volatility and focus on stability.
- Institutional investors supported Microsoft’s cautious stance on cryptocurrency.
As a seasoned investor with over three decades of experience under my belt, I’ve learned that patience and prudence are essential traits for any successful portfolio management. Microsoft’s decision to steer clear of Bitcoin, despite its potential upside, seems like a calculated move based on their long-term strategic goals.
Despite forecasts indicating substantial expansion in the Bitcoin market, Microsoft’s shareholders have chosen not to support an initiative to invest in Bitcoin.
As an analyst, I’ve been advocating for a shift in Microsoft’s investment strategy. Specifically, I believe that part of their reserve assets could be allocated towards Bitcoin, a suggestion initially proposed by MicroStrategy CEO, Michael Saylor.
Saylor emphasized that Bitcoin currently ranks as the seventh most valuable global asset, and it’s projected to exceed a market cap of two trillion dollars soon. This valuation could potentially climb even higher, reaching approximately 200 trillion dollars by the year 2045.
Nevertheless, the board’s choice was backed by significant institutional shareholders such as Vanguard and BlackRock, due to their apprehensions about market fluctuations.
Microsoft chooses AI over crypto
Rather than delving into cryptocurrency investments, Microsoft is prioritizing innovations in Artificial Intelligence and showing caution in this area, signaling a strategic move towards prioritizing advanced technological developments over digital assets.
Remarking on the same, Satya Nadella, Chairman and CEO said in a proxy statement,
Artificial Intelligence (AI) is a groundbreaking technology that is reshaping the world as we know it. Our conviction is that AI has the potential to drastically improve the productivity levels of every person, company, and sector, helping us tackle some of the significant problems facing our planet.
Nadella added,
Microsoft understands that its success is tied to global prosperity. Our goal is to ensure that the transition to Artificial Intelligence (AI) brings widespread advantage, all the while addressing and minimizing any potential risks associated with it.
What could be the possible reason behind this move?
According to the National Center for Public Policy Research’s proposition, there was a suggestion that Microsoft set aside around $784 million from its total assets for investment in Bitcoin (BTC), aiming to protect against potential inflation.
Although the idea presented in the proposal was forward-thinking, worries about Bitcoin’s instability and possible threats to financial security ultimately influenced the board’s choice.
Major shareholders such as Vanguard, BlackRock, and State Street, representing approximately 70% of Microsoft’s outstanding shares, have backed the company’s leadership, striking a careful stance that aligns with their wider involvement in cryptocurrencies.
Microsoft emphasizes maintaining stability, choosing reliability over potential risks.
The high level of volatility in Bitcoin, along with its frequent market swings that could potentially lead to major losses (like the 70% drop in 2022), might be a factor in Microsoft’s choice to turn down the proposal.
Furthermore, managing cash flows for both current operations and future investments is essential, and selling Bitcoin during market slumps might result in financial losses.
Additionally, the continuous ambiguity regarding regulations for cryptocurrencies makes things even more intricate.
Consequently, Microsoft continues to prioritize safe investments such as treasury bonds, aiming for long-term durability and consistent expansion.
Mixed community reactions
Just as anticipated, Microsoft’s choice to decline Bitcoin investment sparked a wave of critique and ironic remarks from the cryptocurrency community, as underscored by Bitcoin Archive in their latest social media post.
Saylor too jumped in and said,
In five years, it will become clear. People get Bitcoin at its rightful price. #BTC doesn’t slow down or pause; it just moves wealth towards those who perceive its value.
Nevertheless, many backers stood up for Microsoft, highlighting their commitment to long-term resilience and careful strategy.
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2024-12-11 17:12