MicroStrategy Inc MSTR recently spent more than $800 million buying an additional 12,000 Bitcoin BTC/USD. Monday on CNBC’s “Squawk Box,” Executive Chair Michael Saylor explained why MicroStrategy is so bullish on bitcoin.
What To Know: MicroStrategy announced a new $800 million convertible senior notes offering this week and then used the net proceeds to buy bitcoin. In a new regulatory filing, MicroStrategy said it now holds approximately 205,000 bitcoin.
Bitcoin is up more than 70% since the start of the year. The rally has largely been driven by increased demand following the approval of spot Bitcoin ETFs in January. Those spot ETFs have diverted capital from other risk assets into bitcoin, Saylor said, adding that as funds continue to add bitcoin, the asset class is going to become more structural.
Looking ahead, the upcoming halving event expected to take place around April 20 is going to cut supply in half, which will cut down the amount of natural bitcoin sellers and further fuel the supply-demand imbalance, he said.
“The price of bitcoin is going to have to adjust up in order to meet that investor demand, so I think that’s what’s going to happen next,” Saylor said.
Saylor told CNBC that MicroStrategy offers investors a better bitcoin investment vehicle than the ETFs because the company has intelligent leverage.
“Is there any company in the world that you wouldn’t like to invest in that could borrow a billion dollars at less than 1% interest to invest in your best idea? That leverage gives us performance, the performance gives us volatility, the volatility attracts capital, and we can leverage more,” Saylor said.
By raising capital to buy bitcoin, MicroStrategy is able to keep shareholders happy because their amount of bitcoin exposure per share increases. For those who are thinking about buying bitcoin for the first time, MicroStrategy offers the upside of bitcoin with some downside protection, he said. Bitcoin maximalists like the equity, hedgers like the downside protection and traders like the volatility of MicroStrategy, he added.
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Why Bitcoin? Bitcoin is a superior investment to gold, equities, bonds and real estate because it’s digital, it’s available all the time, it’s a global asset, it’s ethical and fundamentally, it’s useful, he explained.
“Bitcoin is certainly at least digital gold. It’s going to eat gold,” Saylor said. “It’s got all of the great attributes of gold and it’s got none of the defects.”
MicroStrategy has stayed true to its bitcoin strategy regardless of crypto prices. Saylor told CNBC that the company never questioned its strategy along the way.
“There isn’t any catalyst to drive this asset down. It has no cash flows. The critics think that’s a defect, it’s a feature. With no cash flows, no quarterly results, no product cycles, this is the longest lived asset in the financial ecosystem with the least uncertainty. We’re buying it to hold it for 100 years,” Saylor said.
“We’re just waiting for the rest of the world to realize how good it is.”
Read Next: Bitcoin Blasts Past $70,000, Ethereum Breaks $4K Barrier: What’s Driving Crypto Higher?
$BTC Price Action: Bitcoin hit new highs Monday morning. It was up 3.84% over a 24-hour period, hovering around $72,125 at publication time, per Benzinga Pro.
Photo: kitti Suwanekkasit from Shutterstock.
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