Exactly one month ago, following MSTR's latest purchase of bitcoin which helped push its stock to all time highs, we laid out a simple case for "How bitcoin hits $100,000 next" which boiled down to just one observation: "countless other publicly-traded firms will now rush to convert all their cash (and more) into bitcoin" an observation which was based on something we noticed two months earlier, namely that very soon it would be "cool" - not to mention lucrative - for corporations to buy bitcoin, and once that bandwagon was unleashed, $100,000 bitcoins would be just a matter of time.
MicroStrategy Hits 20-Year High After Citron Call, Bitcoin Jump— zerohedge (@zerohedge) November 25, 2020
Here comes the new "blockchain" bandwagon: Which company will convert its cash into bitcoin next?
Incidentally, that was also when we - correctly - predicted that Elon Musk would become the first mega-corporation to convert a substantial portion of his cash into bitcoin:
One such company which we are convinced will announce it is converting billions of its existing cash into bitcoin, is none other than Tesla, whose CEO Elon Musk was urged by MSTR CEO Saylor to make a similar move with Tesla’s money. And since Musk, already the world's richest man thanks to the most aggressive financial engineering on the planet, has never been one to shy away from a challenge, we are absolutely confident that it is only a matter of time before Tesla announces that it has purchased a few billion in bitcoin.
It took one month for Elon Musk to do just that.
We bring all this up (again) because in the latest example that imitation may well be the sincerest form of analytical flattery (by billionaires), late on Monday, billionaire bitcoin preacher Michael Novogratz, the founder of cryptocurrency investment firm Galaxy Digital, said he sees Bitcoin "more than doubling to $100,000 by the end of the year" - sounds nice-round-numberishly familiar - spurred higher as more companies allow customers to use the token to make purchases, a thesis and price target first laid out here on Jan 9.
Shortly after we tweeted the following rhetorical musing earlier today...
Which will be the next top 20 company to convert (some) cash to crypto— zerohedge (@zerohedge) February 8, 2021
... which we subsequently refined by suggesting that every company will now scramble to generate the kinds of stock returns that Microstar had achieved in the last 12 months, surpassing even TSLA in percentage terms as it accumulated "billions and billions" of bitcoin.
TSLA vs MSTR indexed 1-year return— zerohedge (@zerohedge) February 8, 2021
The question is not which company will buy bitcoin next. It's which company won't pic.twitter.com/KqTiJvkuFy
... Novograts appeared on Bloomberg TV and said almost verbatim what we have been saying for the past month, namely that “you’re going to see every company in America do the same thing,” referring to TSLA's $1.5BN purchase, which should propel the crypto to the stratosphere. And furthermore, between corporations adding Bitcoin to treasury funds and the city of Miami also considering adding the cryptocurrency to its balance sheet, “It doesn’t have to be a lot. It’s the messaging that matters, you’re seeing the herd here, and it’s coming.”
Also repeating what we said in Jan, Novo - whose net worth hit an all time high today in the "billions and billions", said that other companies would consider moving excess reserves into Bitcoin, perhaps as a hedge against inflation or against a falling dollar.
Or just to telegraph to their investors to buy their stock, since buying bitcoin is the "cool" thing now, and lead to even faster bonuses than stock buybacks.
Wired: buy bitcoin— zerohedge (@zerohedge) February 8, 2021
Tired: buy back stock
Expired: run a viable, cashflow positive company
While his enthusiasm was hardly shared by his Bloomberg hosts some of whom have been spectacularly wrong about bitcoin for year and year and years (which is ok because they've also been wrong about everything else too), Novogratz said Elon Musk was a “genius” in his decision to “listen to the people,” or weighing the interests of a rising generation.
"One of the things that connect Bitcoin, and Tesla and solar stocks and ESG investing is millennials and Gen Z, young people are buying into the future, and they see cryptocurrencies -- Bitcoin and other currencies -- as their currencies."
To be sure, skeptics will remain, in no small part due to Bitcoin’s infamous volatility - just a few days ago it plunged 25% before soaring by 50% days later - has made it difficult for usually risk-averse CFOs to make it a regular part of corporate treasuries, however, with Elon Musk "breaking the seal" so to speak, the stigma of diversifying into such a volatile asset class is now gone and on the contrary, everyone will now scramble to buy some while they still can in hopes of levitating their stock and equity-linked comp in the process.
In other words, "bitcoin is the new buyback."
“Now you got the biggest, the wealthiest man in the world and one of the biggest stories doing it,” Novogratz said. “You’ve got to think other CFOs and CEOs are saying, what should we be doing?”
Why buying of course, as we said first in November.
Full Bloomberg TV interview below: