What will happen to the price of Bitcoin if Microsoft shareholders vote to buy BTC?
On October 24, Microsoft Corporation's (MSFT) filing with the United States Securities and Exchange Commission (SEC) revealed an unexpected item on the agenda for its upcoming annual shareholder meeting on December 10.
Alongside the usual noises—such as the election of directors, the approval of the independent auditor, and reports of AI misinformation—one proposal stood out: “Investment evaluation in Bitcoin. Ironically, Microsoft's board advised shareholders against it.
Microsoft's Financial Position and Potential Bitcoin Price Impact
In the year In its financial report for the second quarter of 2024, Microsoft had $76 billion in cash and cash equivalents. If the shareholders push the company to allocate even 10% to Bitcoin, it will represent a massive investment of 7.6 billion dollars.
At an average Bitcoin price of $73,000, this translates to 104,109 BTC – nearly eleven times the amount held by Tesla, which currently stands at 9,720 BTC. Although this figure is high, it has resulted in 252,220 BTC holdings and continues behind MicroStrategy's aggressive accumulation strategy.
However, due to the decreasing supply of Bitcoin, more than 80% of BTC has not moved for more than six months, and the balance on the BTC exchange has fallen to the lowest level in more than 4 years – Microsoft finding this amount can cause a supply shock.
Whether or not this becomes a reality depends on how shareholders vote in December, but even the possibility has already sent ripples through both corporate and crypto sector circles.
How American shareholders work
In US public companies such as Microsoft, shareholders vote on important decisions at annual meetings. Votes on a specific proposal, such as a Bitcoin investment, are typically non-binding, but they serve as a gauge of shareholder sentiment and, if there is enough support, can pressure the company to act accordingly.
Under SEC rules for public companies, a large shareholder can compel a company to consult all shareholders on certain matters. However, the board recommended no vote on the Bitcoin proposal, perhaps reflecting caution over volatility and regulatory uncertainty. Still, the increasing demand for Bitcoin from institutional investors cannot be ignored.
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Reid Hoffman, the founder of LinkedIn and a member of the board of Microsoft, expressed his positive view on Bitcoin in an interview with Yahoo Finance. Hoffman referred to Bitcoin as a digital store of value and emphasized its role in shaping the future of financial systems. Hoffman is best known for being an early investor in Xapo, a key Bitcoin escrow service provider.
If Microsoft decides to invest in Bitcoin, there are several methods. How Tesla acquired its holdings The company can directly buy bitcoins through regular exchanges.
Another option is to buy shares of a Bitcoin spot ETF, which offers indirect exposure, additional liquidity and regulatory transparency, while avoiding the direct protection risks associated with holding physical assets. This structure facilitates easy buying and selling, which improves capital efficiency.
Microsoft can use leverage, including the use of derivatives such as call options, to strategically increase its market exposure without deploying large upfront capital. This enables speculation on price movements, which can expand profits. However, it introduces additional risk due to its benefits in such areas.
Ultimately, Microsoft is unlikely to invest in Bitcoin anytime soon, but the push from shareholders highlights Bitcoin's appeal, which could encourage other companies to explore it.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.