Michael Saylor on Why Investors Might Prefer MicroStrategy Stock (MSTR) Over Bitcoin ETFs for BTC Exposure

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As a seasoned financial analyst with decades of experience under my belt, I must say that I find myself increasingly intrigued by MicroStrategy’s bold and innovative approach to investing in Bitcoin. Michael Saylor, the company’s executive chairman, presents a compelling case for the digital gold’s potential as a store of value and a strategic investment tool.

Today, during an interview on CNBC’s “Squawk Box,” Michael Saylor, co-founder and executive chairman of MicroStrategy, elaborated on the company’s approach to investing in Bitcoin and its broader business plans. Saylor emphasized that despite market fluctuations, MicroStrategy has stayed dedicated to its Bitcoin strategy. Since August 2020, the company has been steadily increasing its Bitcoin holdings. He boasted that since then, MicroStrategy has amassed approximately $8.3 billion worth of Bitcoin.

Saylor emphasized that MicroStrategy’s investment in Bitcoin has delivered superior returns compared to traditional stock market investments. He stated that Bitcoin’s value has increased by an average of 44% annually since the company’s initial investment, outperforming the S&P 500, which has risen by 12% annually over the same period. He further asserted that MicroStrategy, with its Bitcoin-focused strategy, has outperformed every company in the S&P 500, including Nvidia, which had seen gains of 821% as of the interview date.

MicroStrategy primarily relies on Bitcoin for its investment approach, but the company’s original software business continues to function as a steady source of income, which Saylor referred to as a “cash cow.” Nevertheless, the main emphasis has been moved towards securitizing Bitcoin. In simple terms, this means that the company has started offering convertible bonds linked to Bitcoin, creating diverse investment opportunities. He pointed out that some investors prefer riskier investments, while others opt for less volatile ones. To cater to both types of investors, MicroStrategy provides varying levels of exposure to Bitcoin, depending on the desired level of risk.

In simpler terms, Saylor outlined that MicroStrategy is a trailblazer in the realm of Bitcoin-supported bond markets. They’ve issued bonds that can be converted into Bitcoin, which are secured by Bitcoin itself. These bonds provide the possibility of substantial earnings and at the same time, they offer a way for investors to guard against Bitcoin’s price fluctuations.

Regarding the influence of recently launched US-traded Bitcoin ETFs on the market, Saylor admitted they’ve boosted demand for Bitcoin but cautioned that they might also bring about increased volatility. He noted that these spot ETFs mirror Bitcoin’s performance closely with minimal charges but lack the returns MicroStrategy generates via its convertible bond deals. As explained by Saylor, MicroStrategy gains a 50% bonus on its bonds and reaps benefits from Bitcoin’s performance indirectly.

Saylor elaborated on the recent withdrawals from Bitcoin spot ETFs, linking them to Bitcoin’s swift trading dynamics. He described Bitcoin as “intelligent, quick, robust money,” emphasizing that its liquidity permits investors to promptly enter and exit positions. He pointed out that this characteristic, though advantageous in the long term, can also cause temporary market fluctuations.

In comparison to conventional assets like real estate or physical goods, Saylor pointed out that Bitcoin is remarkably more fluid and interchangeable. To illustrate this, he brought up the scenario of a missile strike, suggesting that unlike real estate, Bitcoin can be swiftly traded or transferred across borders, rendering it an invaluable asset during times of instability. Although Bitcoin exhibits considerable volatility, Saylor emphasized its role as “digital gold” over the long haul, and he believes that its track record warrants its designation as a store of value.

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2024-09-09 16:27