TD Cowen releases positive report on Bitcoin and MicroStrategy.
TD Cowen releases positive report on Bitcoin and MicroStrategy.
The Paradigm Shift: MicroStrategy’s Adoption of Bitcoin
Investment banking company, TD Cowen, has recently published a report on MicroStrategy and its adoption of Bitcoin. This move by MicroStrategy represents a paradigm shift in corporate strategy, as the company converts its excess cash flow into bitcoin as a defensive and opportunistic strategy. TD Cowen describes this strategy as a means to combat the depreciation of purchasing power holding the US dollar.
Bitcoin as a Superior Store of Value
Unlike fiat money, the total supply of bitcoin is capped at 21 million bitcoins, making it a potentially superior store of value. According to TD Cowen’s report, this strategy is not short-term but rather a long-term plan that predicts bitcoin will become a superior store of value in comparison to metals and fiat currencies. MicroStrategy’s large BTC holding makes it an attractive vehicle for investors looking to gain bitcoin exposure.
Near Term Catalysts for Bitcoin Price Rise
TD Cowen identifies several significant near-term catalysts for the price of bitcoin to rise. These include the approval of a spot Bitcoin ETF by the SEC, the development of the Lightning Network, potential FASB/GAAP accounting changes regarding Bitcoin holdings, and the upcoming bitcoin halving. The investment bank expresses optimism towards the approval of a spot Bitcoin ETF, stating that it is a matter of “when” rather than “whether” it will eventually be approved.
Bitcoin’s Properties and Longevity
TD Cowen highlights Bitcoin’s properties, such as durability, portability, fungibility, verifiability, divisibility, scarcity, and censorship resistance, as reasons why it could ultimately represent a superior store of value. Despite being relatively new compared to gold or the dollar, Bitcoin has weathered enough trials in the market to suggest a high likelihood of its continued existence. This notion is supported by the Lindy effect, which posits that the longer Bitcoin remains in existence, the more confidence society will have in its continued existence.
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Bitcoin’s Potential Growth
TD Cowen predicts that if Bitcoin were to surpass the $17 trillion gold stocks market, its price could reach around $800,000 by 2023. Furthermore, as adoption of Bitcoin increases and demand rises, TD Cowen envisions a short-term upside scenario, where the price of BTC appreciates by 127% to around just above its all-time high at $70,000. However, regulatory crackdowns could result in a downside scenario with a crash back to $15,000.
Bitcoin Mining Efficiency
Contrary to negative reports on Bitcoin mining and its energy consumption, TD Cowen believes that Bitcoin mining is one of the most efficient and cleanest industrial uses of electricity. The report argues that simple economics drive bitcoin miners to sources of energy with the lowest cost, leading to ongoing improvements in energy efficiency.
In conclusion, MicroStrategy’s adoption of Bitcoin marks a paradigm shift in corporate strategy and demonstrates the potential for Bitcoin to serve as a superior store of value. TD Cowen’s report sheds light on the near-term catalysts for Bitcoin’s price rise, highlights Bitcoin’s properties and longevity, and outlines its potential for growth. With the ongoing evolution and adoption of blockchain technology, the future of the blockchain industry looks promising.
