Bitcoin briefly surged above $ 50,000 on Tuesday after MicroStrategy announced it would offer convertible senior unsecured notes worth $ 600 million that will expire on February 15, 2027 to buy more of the flagship cryptocurrency.
“MicroStrategy also expects to provide first-time buyers of the Notes an option to purchase up to an additional $ 90 million in principal within a period of 13 days from the date the Notes were initially issued,” the Nasdaq-listed software company added.
In retrospect, senior convertible bonds are securities that represent loans / investments in an underlying asset. MicroStrategy forecast Bitcoin as a de facto asset and allowed investors to convert the bonds into stocks in the company. In the meantime, sticking to them would bring investors an annual return that is determinable at the time the offering is pricing.
The announcement helped push Bitcoin price above $ 50,000 for the first time in its life. At 0730 New York, the BTC / USD exchange rate had hit a record high of $ 50,645. However, stronger profit-taking sentiment near the local top resulted in an immediate downward correction.
Bitcoin hits $ 50,000 – and then falls. Source: BTCUSD on TradingView.com
As a result, the pair fell to just $ 48,400 in the upcoming sessions.
Further Bitcoin adoption in process
However, many analysts assumed the price rally will continue into the month based on hard evidence of Bitcoin’s growth as an institutionally friendly capital. In February alone, US automaker Tesla revealed a BTC value of $ 1.5 billion in its corporate reserves. And Twitter expressed the likelihood of a copycat investment in the cryptocurrency.
Meanwhile, the Bank of New York Mellon announced that it would offer Bitcoin custodian banking services through the same platform that its customers use to manage traditional securities and cash. Mastercard also announced its plans to add crypto payments to its existing services by the end of 2021.
Mohamed A El Erian, the alliance’s chief economic advisor, said the market would see more companies adding Bitcoin on their balance sheets as there would be no other way to mitigate the risks of the Federal Reserve’s unlimited quantitative easing policy.
“So it’s part of the distortion in financial markets that we’re generally seeing,” he added.
