Meliuz Implements Bitcoin Reserve Strategy, Boosting Shares Significantly

Brazilian fintech Meliuz has initiated a strategy to invest a portion of its cash reserves in bitcoin, which prompted a 25% increase in its stock price. The company aims for long-term returns, having already purchased over $4 million worth of bitcoin. This innovative approach may enhance its financial position and attract crypto-investors, although it could also lead to increased volatility.

Meliuz, a Brazilian fintech company, has adopted a new strategy to allocate part of its cash reserves to bitcoin, a decision that could lead to the cryptocurrency becoming the primary asset in its treasury. Following this announcement, shares of Meliuz soared over 25%. This strategic move aims to achieve long-term returns and is inspired by successful firms such as U.S.-based Strategy and Japan’s Metaplanet.

According to a securities filing, Meliuz plans to allocate up to 10% of its cash reserves to bitcoin, having already acquired 45.72 bitcoins for approximately $4.1 million. Established in 2011, Meliuz began by providing cashback services for online purchases before expanding into physical retail and digital financial services, including free digital accounts and credit cards. Despite going public in late 2020, Meliuz’s stock value significantly declined due to Brazil’s high-interest rates, although the company maintains over 240 million reais ($41.72 million) in net cash.

Chairman Israel Salmen expressed that while investing significantly in fixed-income may seem prudent, it entails a considerable opportunity cost. He noted that this new strategy aims to enhance Meliuz’s financial stability and potentially position the company as a leader in the evolving financial landscape. Furthermore, Meliuz intends to conduct a thorough analysis regarding the adoption of bitcoin as its primary strategic treasury asset.

UBS BB analysts remarked that while Meliuz’s approach is relatively novel among Brazilian firms, it aligns with a rising global trend aimed at identifying alternative value stores and investment opportunities. They concluded that if the strategy succeeds, it could distinguish Meliuz in attracting investors seeking cryptocurrency exposure; however, they also indicated that it may lead to increased volatility in performance.

Meliuz’s decision to invest in bitcoin represents a significant shift in its treasury management, aimed at pursuing long-term financial gains. Inspired by established companies, this strategy not only aims to enhance its financial stability but also positions Meliuz to potentially become a pioneer in the evolving cryptocurrency landscape. Despite the risks associated with increased volatility, this move may attract a new class of investors eager for crypto-related opportunities.

Original Source: www.usnews.com