Strategy Executive Chairman Michael Saylor has disclosed the motivations behind the firm’s $500 million investment in Bitcoin. In an in-depth conversation on Real Vision, he explained how rising inflation and weakening confidence in fiat currency led to a decisive shift in capital strategy.
Referring to cash holdings, Saylor once wrote that holding a melting mound of ice was like sitting on a melting ice cube, with the actual yield falling to negative 25 percent during recent inflation outbreaks. He said investors no longer regarded the size of the company’s cash reserves as an asset but a liability.
He began researching alternatives to preserve value, but real estate posed risks from ongoing taxes, and bonds offered low returns. Stocks were loaded with uncertain market exposure. Gold, although having been a conventional hedge, was becoming less and less of a purchasing asset because of constant supply growth.
Bitcoin was starting to outweigh other options, as they could not meet long-term objectives. Saylor pointed out that its limited supply, capped at 21 million coins, offered a distinct economic system that was immune to inflation.
He also compared Bitcoin and Fiat, describing the former as a steel-hulled freighter designed to stay useful over decades, in contrast to the inflatable raft that is FIAT.
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Bitcoin Seen as Long-Term Solution Amid Economic Instability
According to Saylor, the logic behind Bitcoin rests on its predictability. He argued that Bitcoin should be measured by its fully diluted supply, similar to how investors view stocks. Unlike gold or other commodities, increased demand does not increase Bitcoin’s supply.
He admonished traditional assets, saying that when the demand for a commodity such as gold increases, the new supply will lower long-term returns. With Bitcoin, he said, that risk is avoided by its issuance being dictated by code rather than market reaction.
Strategy went to the extreme of obtaining Bitcoin using OTC brokers and automated buyer systems to avoid destabilizing the price. Saylor revealed that the company would wait until panic times to invest capital in large amounts.
He also expressed some fears about Ethereum, citing its constant updates and being non-limited as criteria, adding uncertainty to this currency. In the case of Strategy, Bitcoin was the most consistent and transparent in terms of value retention in the long term.
In his comments, Saylor indicates an astonishingly narrow turnaround at Strategy. The company currently regards Bitcoin as its best defense against fiat dilution. The company’s $500 million wager demonstrates a larger recalibration of the ways to maintain value in a new financial environment.
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