The Metaplanet company decided to copy the Bitcoin strategy implemented by Microstrategy, Michael Saylor's firm.
Big in Japan
Metaplanet, a company listed on the Tokyo Stock Exchange, has just published the reasons why bitcoin will now be a “strategic cash reserve asset”.
This is a direct response to “high level of Japanese public debt, the prolonged period of negative real interest rates and the resulting weakness of the yen”.
Indeed, Japanese public debt represents 261% of GDP and the yen is at its lowest level in 34 years against the greenback. It has lost 50% of its value since 2012.
“The overwhelming national debt requires structurally low interest rates that significantly weaken the yen”can we read in the communicated.
“The yen's precarious situation was revealed to the world at the end of April. The yen fell to a 34-year low against the dollar. It required unprecedented intervention by the BoJ on the foreign exchange market( ~35 billion $) to straighten it. »
Metaplanet considers bitcoin to be fundamentally superior to any other currency, cryptocurrency, store of value or traditional investment:
“Bitcoin monetary policy is set in stone until 2140. This sets it apart from both gold and other cryptocurrencies whose money supply depends on the whims of centralized developer teams. There will only ever be 21,000,000 bitcoins. »
Strategic reasons for adopting bitcoin
Metaplanet is shifting its treasury strategy toward bitcoin primarily to mitigate exchange rate risks from Japan's gargantuan debt.
Two of the main advantages highlighted are:
1) “Protection against currency depreciation. As the yen continues to weaken, bitcoin offers a stateless store of value that could continue to appreciate against traditional currencies. »
2) “Speculative arbitrage in financial markets. Taking advantage of the extreme opportunity presented in the Japanese financial markets, Metaplanet intends to acquire bitcoins through the issuance of long-term yen bonds (at very low rates) or through the issuance of 'actions. »
It is therefore the same strategy implemented by Microstrategy which owns 214,400 BTC in cash. Here is a good conversation for English speakers about this strategy:
Michael Saylor's firm has already borrowed nearly 600 million dollars at a rate of 0.88%. All via convertible loans due only in 2031. It also issues more shares when the company (and the market as a whole) is overvalued. The goal is always to buy more bitcoins.
This is dilution in the sense that shareholders hold fewer shares of the company, but they end up owning more bitcoins per share.
Michael Saylor believes that all overvalued companies should issue shares and place the proceeds of the issuance in bitcoins. His strategy is ultimately very simple: obtain as much fiat currency as possible and buy bitcoins with it.
Diluting your shares is like taking out a mortgage on your house. It's not a bad idea if the asset you're investing in appreciates faster than your house.
When will LVMH's turn?… Let's end by emphasizing that Michael Saylor assures that there will be no Ethereum ETF.
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