Experts say Microsoft's consideration of investing in bitcoin is a sign that public companies are increasingly embracing cryptocurrencies as a diversification strategy to maintain market dominance and protect shareholder value.

Microsoft's proposal reflects changing strategies of corporate treasury groups

Reports that Microsoft may use some of its cash reserves to buy BTC indicate a growing trend of public companies considering it as a strategy to maintain market dominance and protect shareholder value, experts argue. They point to BTC’s outperformance over other asset classes over the past decade as a reason for its appeal, especially as inflation wreaks havoc even in previously stable economies.

While Microsoft's board of directors has urged shareholders to vote against a proposal to convert at least 1% of the company's assets to BTC, the discussion of the idea - despite co-founder Bill Gates' previous criticism of the cryptocurrency - has piqued the interest of BTC supporters.

Daniel Cawrey, chief strategy officer at Tonkeeper, told Bitcoin.com News that the discussion within Microsoft’s board, even with a recommendation against the proposal, also shows progress in the acceptance of BTC as a diversification strategy within public companies.

“It is worth noting that Microsoft’s board is recommending against this idea,” Cawrey said. “However, the fact that some Microsoft stakeholders support this strategy suggests that it is at least being considered in boardrooms. This is a positive development for bitcoin as a diversification tool, as it is sparking lively debate – which is great.”

Echoing a similar sentiment, Nate Holiday, co-founder and CEO of Space and Time, said the proposal, if approved, would not be Microsoft’s first investment in Web3. According to Holiday, Microsoft’s “robust” treasury and investment management team has already demonstrated its willingness to bet on Web3 by investing in his company in 2022.

Microsoft unlikely to convert all cash into Bitcoin

While Microsoft's proposal to add Bitcoin to its treasury may or may not be approved, Holiday predicts that many listed companies will invest in Bitcoin or Web3.

Meanwhile, both experts agree that Microsoft's fund management team is unlikely to invest all its cash into BTC at once, which could impact the price. Instead, they believe that the team, or any other fund management team at the company, will take a more gradual approach.

“Investment and treasury teams are sophisticated professionals. The idea that $76 billion would be poured into one asset all at once seems implausible. Corporations take a long-term view of creating shareholder value and manage their investments over a longer period of time than the market expects.”

Even if Microsoft uses all its cash to buy BTC, the impact on the market would be less significant than it was in the past. Cawrey noted that the cryptocurrency market is now more mature and liquid than it was in 2017-18.

Furthermore, Microsoft or any company looking to buy a large amount of Bitcoin has many options, including market makers, over-the-counter (OTC) providers, and exchange-traded funds (ETFs). Buying BTC through these intermediaries significantly reduces the likelihood that a single purchase will impact the market.
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