Michael Saylor was a guest on CNBC's Squawk box to explain once again that we should embrace bitcoin's volatility. As always, his statements hit the mark.
Bitcoin and the “problem” of its volatility
The exchange was above all an opportunity to recall the success of the famous “bitcoin strategy”. Microstrategy now holds the equivalent of $8.3 billion in bitcoin.
Considering that Bitcoin has appreciated by an average of 44% per year since August 10, 2020, the date Microstrategy crossed the Rubicon. For comparison, the S&P 500 has only increased by 12% per year.
Furthermore, let's recall that Microstrategy also borrows to acquire some of its bitcoins. This leverage generated a return of 825%. This is more than the best-performing stock in the S&P500, NVIDIA (821%).
In other words, succeeding in the feat of choosing THE best stock among the 500 stocks of the S&P remains less effective than simply betting on bitcoin…
Asked about the recent ETF outflows and their overall impact on bitcoin, Saylor was unfazed:
“Bitcoin ETFs have generally been a good thing because they’ve increased demand. But you have to keep in mind that bitcoin is a fast, liquid currency that’s traded by smart money. If you’re worried about a missile attack on a Saturday night, you can’t teleport your million-dollar apartment to Singapore and short a hundred million dollars of New York real estate. But you can short a hundred million dollars of bitcoin. So there’s a lot of fast traders, a lot of volatility. And that feeds into the volatility of ETFs, but that’s okay.”
When asked by a journalist that bitcoin does not behave like digital gold during times of stress, Michael Saylor insisted that there is no such thing as “nothing abnormal”.
For him, bitcoin “is the most liquid, fungible, and free capital market in the world. Your apartment in New York is not fungible and it is not liquid. You can’t panic sell it. When people panic in the short term, bitcoin gets a big shake-up.”
“Precisely, isn’t bitcoin supposed to be a safe haven in times of panic?”the journalist asked again. Gigachad's response:
“Over the long term, it has appreciated by 44% per year. The alternative is to get 12% by investing in the S&P500 and its low volatility. If you accept three times the volatility, you get a three times the return of 44%. Over the long term, the return will be excellent, because bitcoin is a solid capital. Over the short term, if you are a trader, you have a lot of arbitrage opportunities.”
Michael Saylor's advice being to “to buy bitcoins and hold them for at least four years”For him, bitcoin will end up representing 7% of global capital, compared to 0.1% today. “My long term prediction is that a bitcoin will be worth 13 million within 21 years”he said.
And in 5 years?
“Bitcoin has appreciated 44% per year. I think it will appreciate another 44%, then 35% per year, then 30%, then 25%, and at some point it will be the return of the S&P 500 plus 8%. Bitcoin’s volatility will also be the volatility of the S&P 500 plus 8%. That premium will come from the fact that bitcoin will always be a more global, more open, and freer capital market.
Bitcoin is an expression of the view that you should invest in an asset that has no counterparty risk. You don’t want to be the counterparty to a country, a currency, a city, a company, a commodity, or a culture. People think that investing in bitcoin is risky when it’s really about taking no risk. No one wants to guess whether Picassos, New York real estate, or NVIDIA stock will be worth more in ten years. They want money. They want one twenty-one millionth of all the money that will ever exist in the world.”
Need I say more?…
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