Bitcoin Comes Of Age

Once shunned by Wall Street, Bitcoin is going mainstream.

Bitcoin’s legitimacy as an asset class got a dramatic boost last month after MicroStrategy, which is listed on Nasdaq, said it would make a significant investment in the cryptocurrency. The company, which claims to be the largest independent publicly-traded business intelligence provider, issued $650 million in unsecured 0.75% convertible senior notes due in 2025 as institutional investors rushed to embrace cryptocurrencies towards the end of last year.

It was MicroStrategy’s proposed use of the proceeds that stunned investors. In a statement, the company said it “intends to invest the net proceeds from the sale of the notes in Bitcoin in accordance with its Treasury Reserve Policy pending identification of working capital needs and general corporate purposes.”

The same month, Massachusetts Mutual Life Insurance Company (MassMutual) said it purchased $100 million in bitcoin in December for its general investment account. The transaction was facilitated by NYDIG, a provider of institutional investment and technology solutions for bitcoin, in which MassMutual also took a 5% equity stake.

The fact that Bitcoin has survived such a tumultuous year has also helped change investor sentiment toward cryptocurrencies, argues Edward Moya, senior market analyst at foreign exchange dealer OANDA.

“Bitcoin has had an amazing year given prices did not go worthless during the peak of panic selling during the early part of Covid-19,” says Moya. Bitcoin nudged record highs during December breaking the psychologically important $20,000 level.

A further sign of acceptance is the decision by S&P Dow Jones Indices to launch global cryptocurrency asset index capabilities with Lukka, a New York-based crypto asset software and data company, later this year.

“With digital assets such as cryptocurrencies becoming a rapidly emerging asset class, the time is right for independent, reliable and user-friendly benchmarks,” says Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices.