The Purpose Investments Bitcoin Exchange Traded Fund (ETF) has reached $624 million in value in a matter of only nine days. The ETF notably passed the $400 million AUM mark just two days after its launch on Feb. 18. The fund has currently amassed 10,064 BTC. It trades under the tickers “BTCC.B” and “BTCC.U.” The former is the Canadian dollar-denominated fund and the latter is t...
At the end of January, Musk changed his profile to “#bitcoin” on his social media, and Bitcoin rose by about 20% to $38,566. In just 10 days, Tesla announced that it had purchased $1.5 billion worth of bitcoin and was considering accepting bitcoin as payment. When Tesla converts to cash and cash equivalents into Bitcoin, there is a high probability that other companies will follow suit. Who is the next big multinational company to buy Bitcoin? RBC firmly believes that it is Apple.
After the news of Tesla’s purchase of Bitcoin, Bitcoin rose sharply, and it is currently trading above $46,000.
RBC analyst Mitch Steves explained that Apple should focus on developing Apple Wallet first, followed by Apple car; to make full use of its 1.5 billion user base, and later launch a Coinbase similar to the Apple Exchange (Apple Exchange), Allowing Bitcoin transactions, which will increase the valuation by approximately $50 billion.
Mitch Steves, if Apple only buys $1 billion in Bitcoin, or “4 days of cash flow”, it can attract more users to the Apple Exchange. He said: “When thinking of Apple Wallet, we think there is an obvious opportunity to create a mechanism for buying and selling cryptocurrencies. To be clear, we don’t think Apple needs to hold Bitcoin as a balance sheet asset (although this may Helpful) but allows users to buy and sell crypto assets.”
The analyst further explained that Coinbase’s valuation has reached about 50 billion US dollars, if Apple creates a similar virtual currency trading mechanism, it will create the same or higher value. The company already has a strong software ecosystem and installation base that can grab a considerable market share from cryptocurrency exchanges (others including Binance, Kraken and Gemini). Take PayPal as an example. The company now allows the virtual currency to be bought and sold, but it is not allowed to send virtual currency from the system to a hardware wallet (personal custody). Although many users do not like this, it has not stopped PayPal from creating additional revenue in a closed ecosystem.
In fact, a closed ecosystem, which eliminates the risk of assets being removed from the exchange. Glassnode said that the balance of virtual currency exchanges is declining, which will disrupt the exchange’s business model because there are no assets that can be bought and sold for a fee.
Apple is now expanding towards Coinbase and the wider Paypal business model, it is very possible. A more controversial argument made by Mitch Steves is that Apple may directly add Bitcoin to its balance sheet, as Tesla is doing now.
Mitch Steves explained that from another perspective if we assume that the cost of developing a crypto wallet or exchange on the Apple ecosystem is $500 million, they can pay for the development cost by acquiring basic assets. Assuming that Apple purchased $5 billion in Bitcoin (20-25 days of cash flow), the price of the underlying assets would need to increase by 10% before the company can provide full funding for the entire project. This is a reliable value proposition because the source of funding for the business will not dilute the value of any other projects of the company.
MicroStrategy is a case of constantly buying Bitcoin and “buying market value higher”. MicroStrategy has shifted from its traditional business model to become one of the key agents of Bitcoin exposure in the market. The company announced its first purchase of Bitcoin on August 11, 2020, with an average price of $11,653. Subsequently, on August 17, 2020, the price of Bitcoin rose to $12,330.
MicroStrategy’s current stock price is approximately $1,000 per share, a 10-fold increase in 6 months.
On October 21, 2020, PayPal announced that it will allow users to buy, sell and hold virtual currencies in a closed ecosystem. One day after the announcement, the price of Bitcoin rose from $11,927 to $13,083.
Mitch Steves believes that the conclusion is obvious: If Apple announces its entry into the virtual currency trading business and purchases these assets as reserve assets, it is likely to push up the price of virtual currency assets and provide funding for the entire project; and according to Tesla According to experience, Apple will also push its stock price to a high point. The only question is when will Apple adopt such a strategy.