Why Shareholders Want Amazon to Bet on Bitcoin?

What would happen if Amazon added Bitcoin to its balance sheet? With BTC up 125% this year, some shareholders argue that this is the perfect moment to explore the crypto market.

Amazon is under pressure to add Bitcoin to its reserves

Amazon, one of the world’s largest and most influential companies, is facing increasing pressure from its shareholders to diversify its financial reserves by adding Bitcoin (BTC).

Shareholders have pressured Amazon to keep at least a small percentage of its reserves in Bitcoin (just 5%), according to a proposal from the National Center for Public Policy Research.

This proposal stems from a growing trend seen in other large companies such as MicroStrategy, Tesla and Block embracing Bitcoin as a hedge against inflation and potentially as a way to increase long-term shareholder value.

Bitcoin remains a volatile asset that is often subject to dramatic fluctuations in price. But supporters argue that, like Amazon’s own shares, Bitcoin’s volatility should not overshadow its potential to outperform traditional assets like bonds.

As of December 9, Bitcoin has already proven to be a strong performer, rising 125% this year alone, far outperforming traditional investment vehicles including gold and the S&P 500.

By comparison, MicroStrategy, which is heavily invested in Bitcoin, saw its stock price gain nearly 450%, outperforming Amazon’s 51% gain over the same period.

Shareholders argue that Amazon, with $585 billion in total assets, $88 billion of which is held in low-yielding investments such as cash and bonds, should reconsider its investment strategy.

Microsoft faces its own Bitcoin dilemma

Not only Amazon but also Microsoft are facing a similar crossroads when it comes to Bitcoin. As BTC continues its impressive rise, recently surpassing $100,000, Microsoft shareholders have called on the company to follow in the footsteps of companies like MicroStrategy by adding Bitcoin to its balance sheet.

The proposal titled “Evaluation of Investment in Bitcoin” will be put to vote on December 10. The proposal is supported by the same group, NCPPR.

However, Microsoft’s board of directors recommended against the proposal. Co-founder Bill Gates, who has expressed skepticism towards crypto assets, has warned that the current crypto market is essentially driven by a speculative bubble, which he calls the “great fool theory.”

Gates’ approach is also reflected in the board’s stance; many members believe Microsoft has already made thoughtful investment decisions before entering such a volatile area.

In fact, MicroStrategy’s executive chairman, Michael Saylor, directly lobbied Microsoft’s board to consider Bitcoin, arguing that Bitcoin is a pivotal digital transformation and one of the highest-performing assets companies can own.

This vote at Microsoft could set an important precedent. If the proposal is accepted, it will signal that mainstream companies are starting to seriously consider Bitcoin as a legitimate and valuable part of their financial strategies.

MicroStrategy’s move to Bitcoin

Once known as a software and business intelligence company, MicroStrategy has undergone a radical transformation in recent years.

In the past, the company focused on providing enterprise analytics solutions and helping organizations make data-driven decisions.

But in 2020, MicroStrategy made a bold and unconventional return; He began shifting a large portion of his capital into Bitcoin, and this move has since redefined his identity.

This reversal stemmed from concerns about the devaluation of cash in a low-interest inflation environment. MicroStrategy’s leadership, led by then-CEO Michael Saylor, argued that Bitcoin, as a deflationary asset with limited supply, offered a much better store of value.

The firm began aggressively purchasing Bitcoin, describing it as “digital gold” and the cornerstone of its corporate treasury strategy.

MicroStrategy’s Bitcoin buying spree has accelerated rapidly. While it took almost a year to accumulate the first 100,000 Bitcoins, the pace increased significantly in subsequent years.

As of Dec. 9, MicroStrategy owns 423,650 Bitcoins purchased at an average cost of $60,324 per coin, for a total investment of $25.6 billion, making it one of the largest institutional holders of Bitcoin and even holding Nvidia Corp.’s cash. leaving it behind. reserves and most non-financial S&P 500 companies.

The impact on MicroStrategy’s shares has been dramatic. Over the past five years, MSTR’s share price has increased nearly 2,500%, trading at $377 as of Dec. 9. In early November, it reached a 52-week high of $543 before experiencing a pullback.

While Bitcoin’s price gains have increased the company’s valuation, the asset’s volatility means MicroStrategy’s fate is now closely tied to the ups and downs of the crypto market.

Bitcoin could change corporate treasury practices

Companies like Amazon and Microsoft integrating Bitcoin into their reserves could redefine corporate treasury practices on a global scale.

Traditionally, businesses diversify their financial assets with cash, bonds, stocks and other low-risk instruments to manage risk and ensure liquidity during economic changes.

Including Bitcoin, a digital asset with a limited supply, may seem unusual, but it is in line with the growing trend to seek inflation-proof and high-performance alternatives.

The approval of the first spot Bitcoin ETF in January was a major milestone in terms of institutional adoption. It legitimized Bitcoin as a regulated investment instrument and attracted interest from both institutional and individual investors.

As of December 9, combined spot Bitcoin ETFs now have over $115 billion in assets under management (AUM), making them one of the fastest-growing ETFs in financial history.

Even more remarkable is the steady demand: Since November 29, spot Bitcoin ETFs have recorded only net positive inflows, raising over $3 billion in just a few days.

Adding Bitcoin to the reserves of companies like Amazon and Microsoft can improve their financial strategies in many ways. Even a small allocation (say, 5 percent of its reserves) can offer huge upside potential; especially as Bitcoin’s long-term performance continues to outpace traditional assets like gold and bonds.

Moreover, holding Bitcoin would align these companies with the rapidly growing institutional adoption ecosystem; This is a trend highlighted by the explosive growth of ETFs and the entry of major players such as BlackRock into the Bitcoin market.

The ripple effects of such a decision would be profound. If the world’s most influential companies took this step, it could normalize Bitcoin as a treasury asset across all sectors, encouraging smaller companies to follow suit and potentially driving Bitcoin’s price higher due to increased demand.

Crypto’s growing role and the path ahead

The crypto world has changed dramatically in the last few years, and a big part of that change can be traced back to how big names, companies, and governments are starting to get involved.

A notable example of this is the recent appointment of David Sacks as AI and Crypto Czar by President-elect Donald Trump; This highlights how both AI and blockchain are now seen as critical areas for innovation and shows how seriously the US government is taking the issue. these technologies.

Widespread adoption of crypto in particular is similar to the transition of other technological innovations, such as the internet or cloud computing, from niche to mainstream. In the 90s, companies were hesitant about the internet, but now it has become an indispensable part of doing business. The same thing is starting to happen in crypto.

As more companies, from tech giants to financial firms, look for ways to gain exposure to crypto, it’s clear that we’re entering a new phase. The next few years will likely see these shifts become more normalized, and in the process crypto may become as common as other asset classes in corporate treasuries and investment strategies.