Investment Banking Firm Shares insight On MicroStragy’s BTC Adoption

  • TD Cowen views MicroStrategy’s Bitcoin adoption as significant, seeing BTC as a superior store of value.
  • A report by the investment banking firm highlights MicroStrategy’s strategic transformation from a defensive to an opportunistic approach.
  • TD Cowen predicts an optimistic scenario for Bitcoin’s price rise but warns of a downside scenario due to regulatory actions.

TD Cowen has taken a special interest in Michael Saylor’s MicroStrategy’s Bitcoin adoption model and claimed that Bitcoin represents a “superior store of value” in comparison to other forms of money,” TD Cowen’s pro-crypto words have taken the internet by a pleasant surprise.

The investment banking company which recently shut down its digital assets unit, produced a report highlighting that MicroStrategy converts its surplus cash flow into bitcoin using effective leverage. According to the document, this move was a defensive measure to safeguard the value of its assets initially, but it has quickly transformed into an opportunistic strategy aimed at increasing shareholder value. The report adds:

This hybrid corporate strategy represents a paradigm shift, in our view.

As per a form 8-K submitted to the U.S. SEC, MicroStrategy bought Bitcoins from March 24, 2023, to April 4, 2023. During this period, the company acquired around 1045 BTC at an average cost of approximately $28,016 per BTC.

TD Cowen presents MicroStrategy as a “forward-thinking company” which aims to counteract the depreciation of the US dollar’s purchasing power. The report elaborates that, unlike fiat money, bitcoin has a limited supply of 21 million bitcoins, making it potentially a superior store of value. 

Subsequently, the report identifies several significant factors as potential drivers that could positively impact the value of Bitcoin. These factors include the potential approval of a spot Bitcoin ETF by the SEC, advancements in the development of the Lightning Network possible accounting changes by FASB/GAAP regarding the treatment of Bitcoin holdings, and the upcoming Bitcoin halving.

Moreover, TD Cowen predicts an optimistic scenario where Bitcoin’s price could appreciate by 127% to slightly above its previous all-time high at $70,000 as adoption increases and demand grows. On the other hand, if regulatory crackdowns on the asset class continue, the report foresees a downside scenario leading to another crash in the price of BTC, potentially dropping it back to $15,000.

On May 31, Bloomberg reported that TD Cowen closed its digital asset unit after TD Bank Group’s acquisition of Cowen Inc. in March 2023. However, the Cowen Digital team expressed their commitment to serving institutional investors from a different platform.

Compared to other investment banking firms, TD Cowen shares a different stance when it comes to Bitcoin mining, which they regard as “one of the most efficient, cleanest industrial uses of electricity.”

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