MicroStrategy Inc MSTR it recently spent more than $800 million to buy another 12,000 Bitcoin Bitcoin/USD. Monday on CNBC’s “Squawk Box,” executive chairman Michael Saylor explained why MicroStrategy is so bullish on bitcoin.
What to know: MicroStrategy announced a new $800 million convertible senior note offering this week and then used the net proceeds to buy bitcoin. In a new regulatory filing, MicroStrategy said it now holds about 205,000 bitcoins.
Bitcoin is up more than 70% since the beginning of the year. The rally was largely driven by increased demand following the approval of spot Bitcoin ETFs in January. These spot ETFs have diverted capital from other risk assets into bitcoin, Saylor said, adding that as funds continue to add bitcoin, the asset class will become more structural.
Looking ahead, the upcoming halving, expected around April 20, will halve supply, which will reduce the amount of natural sellers of bitcoin and further fuel the supply-demand imbalance, he said.
“The price of bitcoin will have to adjust to meet investor demand, so I think this is what happens next,” Saylor said.
Saylor told CNBC that MicroStrategy offers investors a better bitcoin investment vehicle than ETFs because the company has smart leverage.
“Is there any company in the world that you wouldn’t want to invest in that could borrow a billion dollars at less than 1% interest to invest in your best idea? This leverage gives us performance, performance gives us volatility, volatility attracts capital and we can leverage more,” Saylor said.
By raising capital to buy bitcoin, MicroStrategy is able to keep shareholders happy because their amount of bitcoin exposure per share increases. For those who are thinking about buying bitcoin for the first time, MicroStrategy offers the upside of bitcoin with some downside protection, he said. Bitcoin maximalists like equities, hedgers like downside protection and traders like MicroStrategy’s volatility, she added.
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Why Bitcoin? Bitcoin is a superior investment to gold, stocks, bonds and real estate because it’s digital, it’s always available, it’s a global asset, it’s ethical and, fundamentally, it’s useful, he explained.
“Bitcoin is certainly at least digital gold. It will eat gold,” Saylor said. “It has all the great qualities of gold and none of the defects.”
MicroStrategy has remained true to its bitcoin strategy regardless of cryptocurrency prices. Saylor told CNBC that the company never questioned its strategy along the way.
“There is no catalyst that can cause this asset to collapse. It has no cash flow. Critics think it’s a flaw, that it’s a feature. With no cash flows, no quarterly results, no product cycles, this is the longest-lived asset in the financial ecosystem with the least uncertainty. We’re buying it to keep it for 100 years,” Saylor said.
“We’re just waiting for the rest of the world to realize how great it is.”
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$BTC Price Action: Bitcoin hit new highs on Monday morning. It rose 3.84% over a 24-hour period to around $72,125 at the time of publication, according to Benzinga Pro.
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