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1% BTC and Beyond: What Is Michael Saylor Doing?

MicroStrategy's shares plummeted after the company announced that it had bought an additional 9,245 Bitcoins and now holds over 1% of the asset total supply.

Michael Saylor Bitcoin Microstrategy

On Tuesday, MicroStrategy purchased 9,245 Bitcoins for $623 million, bringing the total holdings of the business software company to 214,246 tokens, or around 1% of the total BTC supply.

Using a strategy of raising debt to buy the cryptocurrency, the tech enterprise increased its Bitcoin assets by 25% during the first months of 2024. In the last two weeks alone, it bought over 21 thousand coins.

The software maker completed two rounds of sales of convertible notes from its stocks to secure funding for purchase of the crypto tokens - the first between February 26th and March 10th and the second between March 11th and March 18th,

Michael Saylor, the company’s co-founder and Executive Chairman, converted to Bitcoin in 2020, making Microstrategy the first Wall Street company to have crypto assets on its balance sheet.

The former CEO is extremely bullish on Bitcoin, which he sees as an ideal hedge against inflation: unlike money, Bitcoin can not be devalued or manipulated.

When Bitcoin reached a new all-time high last week, surpassing silver as the eighth most valued asset in the world, the Wall Street’s crypto poster child remarked during an interview with CNBC, “Bitcoin is certainly at least digital gold, it’s going to eat gold," he claimed, before adding, "it’s got all of the great attributes of gold, and it’s got none of the defects of gold."

Saylor has made buying the digital asset his company’s macro strategy, relegating its software development activities to a second plan. Today, Microstrategy stocks are seen as a proxy for investors who want to buy Bitcoin without direct exposure.

Managing director of equity research at TD Cowen Lance Vitanza, explained to Bloomberg, “We view MicroStrategy as an attractive vehicle for investors that are looking to create exposure to Bitcoin. That’s the only reason to buy MicroStrategy stock, because you want to own Bitcoin.”

The only caveat to Saylor’s plan is that the price of Bitcoin increases over time. Both the previous asset trajectory and financial prospects point in that direction. Yet, there is still some skepticism floating around.

Following the latest purchase of the software firm, investors’ concerns about the company’s strategy of buying such massive amounts of debt led its shares to drop as much as 18%. This downfall was amplified by the plummeting of Bitcoin prices below $61,000.

The tech firm and the crypto token prices have already started to recover, proving Saylor’s motto, “Bitcoin's volatility is vitality”, to be working. But while the price tumble yesterday was brief, one wonders what MicroStrategy will be like if a new prolonged bear market comes.