Michael Saylor Explains Why MicroStrategy Stock (MSTR) Could Be a Better Option Than Bitcoin ETFs for BTC Exposure
September 9, 2024
In a recent interview on CNBC’s “Squawk Box,” Michael Saylor, the co-founder and executive chairman of MicroStrategy, delved into the company’s Bitcoin investment approach and broader business endeavors. Saylor highlighted MicroStrategy’s unwavering commitment to its Bitcoin strategy, even amidst market fluctuations. Since August 2020, MicroStrategy has consistently bolstered its Bitcoin holdings, amassing around $8.3 billion worth of the digital asset.
Saylor underscored that MicroStrategy’s Bitcoin investment has yielded superior returns compared to traditional stock market investments. He pointed out that Bitcoin’s value has surged by an average of 44% annually post the company’s initial investment, outshining the S&P 500, which has seen a 12% annual rise during the same period. Saylor proudly mentioned that MicroStrategy, with its Bitcoin-centric strategy, has outperformed every firm in the S&P 500, including Nvidia, which had witnessed gains of 821% as of the interview.
While Bitcoin remains a core element of MicroStrategy’s investment strategy, Saylor clarified that the company continues to operate its original software business, which he described as a “cash cow.” However, the primary focus has shifted towards securitizing Bitcoin. MicroStrategy has ventured into selling convertible bonds backed by Bitcoin, providing a spectrum of investment avenues. Some investors opt for high-risk options, while others prefer less volatile investments, and MicroStrategy caters to both segments by offering exposure to Bitcoin with varying risk levels.
Saylor elaborated on how MicroStrategy has been a trailblazer in the Bitcoin-backed bond market, issuing convertible bonds collateralized with Bitcoin. These bonds offer the potential for significant returns while enabling investors to hedge against volatility. When questioned about the impact of new US-listed spot Bitcoin ETFs on the market, Saylor acknowledged that these ETFs have heightened the demand for Bitcoin but cautioned about potential volatility. He highlighted that while spot ETFs offer one-for-one performance with minimal fees, they lack the yields that MicroStrategy can provide through its convertible bond offerings. Saylor mentioned that MicroStrategy captures a 50% premium on its bonds and benefits from Bitcoin’s performance on the backend.
Discussing recent outflows from spot Bitcoin ETFs, Saylor attributed them to the swift nature of Bitcoin trading. He emphasized that Bitcoin is considered “smart, fast, strong money,” allowing investors to swiftly enter and exit positions due to its liquidity. Saylor noted that while this feature is advantageous in the long term, it can also lead to short-term volatility.
Drawing a comparison with traditional assets, Saylor highlighted that Bitcoin is more liquid and fungible than real estate or other physical assets. He illustrated this point by explaining that unlike real estate, Bitcoin can be rapidly traded or moved across borders, making it a valuable asset during uncertain times. Despite its volatility, Saylor reiterated that Bitcoin serves as “digital gold” over the long term, and its performance justifies its role as a store of value.
