Yerevan (CoinChapter.com) — Bitcoin (BTC) could renew its bullish rally and possibly hit $100,000, after NEXON LTD, the world’s leading video game publisher based in South Korea has announced the purchase of 1,717 BTC, which was equivalent to approximately $100 million at the time of the deal.
This investment represents 2% of Nexon’s total cash which, according to Owen Mahoney, the President and the Chief Executive of Nexon, reflects the company’s disciplined strategy for protecting shareholders’ value and also to maintain the purchasing power of its cash assets.
“In the current economic environment, we believe bitcoin offers long-term stability and liquidity while maintaining the value of our cash for future investments.”
Mahoney added.
Why Bitcoin?
Nexon’s move of investing in BTC mirrors the prior investments of companies like Tesla and MicroStrategy.
Tesla, the electric car giant, purchased $1.5 billion worth of bitcoin back in Feb 2021. This news alone propelled BTC price by 10%. Tesla’s decision to accept bitcoin as payment for their cars also brought significant gains to the company itself. Not to mention Tesla’s shareholders and anyone who chose to invest in bitcoin at the time.
Nasdaq-listed business intelligence firm MicroStrategy also went on a bitcoin buying spree to offset risks associated with the US dollar devaluation. The company’s most recent bitcoin top-up was on April 5, 2021, wherein it bought 253 BTC for $15 million. It nows owns 91,579 BTC, roughly worth $5 billion.
Michael Saylor, the CEO of MicroStrategy, confessed his “profound unease” about central banks propping up economies with “cheap money” while speaking to Time. The excessive quantitative easing by the Federal Reserve devalued the US dollar by up to 13.5 percent from its mid-March high. Saylor admitted that his lack of trust in the mainstream economy and how it’s run by central banks brought him to bitcoin.
He called the cryptocurrency “digital gold”.
Favorable Economic Climate
There are many indications to support the inverse correlation between the strength of USD against other currencies (USD index – DXY) and BTC price.
Some experts forecast a tough year for the USD, as its volatility continues to rise after the pandemic. DXY has been declining since the beginning of April. That could send the bitcoin prices upward, especially as more investors like Nexon tend to put their trust in decentralized currency rather than the Federal Reserve.
According to Damir Tokic, his global micro indicators show a further money supply rise. This rise indicates an upcoming inflation rate soaring even higher.
Stephen Roach, a contributor for Bloomberg.com, predicted further instability for USD in 2021, stating:
There were three main reasons why I argued the dollar would fall: 1) a sharp widening in the U.S. current-account deficit, 2) the rise of the euro, and 3) a Federal Reserve that would do little in response to any weakness in the greenback. I have a greater conviction on the weak-dollar call today than I did six months ago on each of these counts.
Stephen Roach, Bloomberg,com
Meanwhile, Bitcoin had been in a bearish phase since it briefly hit $64,900 on April 14. It is currently trading at $54,352 and is expected to rise, considering the recent institutional interest.
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