MicroStrategy’s Q1 2023 filings recently disclosed a mind-boggling $6 billion in unrealized losses on its BTC stash. Never mind all that, because Michael Saylor, the company’s chairman, is doubling down on this idea, declaring plans to acquire more BTC. Financial brilliance or slow-motion train wreck. Should we honor his conviction, or is he just risking billions of shareholder money to play a far more perilous game?
Free Market, His Choice?
In this natural human tendency to attack the out-of-the-box thinker, you can do grave damage. Unfortunately, this is most true when the stakes get high dollar. Michael Saylor’s Bitcoin gamble is the perfect case in point. He's putting his money where his mouth is, and frankly, isn't that what free markets are all about?
We are bombarded by financial “gurus” in every medium, telling us how to best save, invest or spend our money. Who are they to decide how we should invest our money. Make no mistake, Saylor’s actions are a clarion call reminder of what is at stake. They don’t minimize or forgive the failures discussed in his letter.
Think about it: the same people who decry Saylor's "recklessness" are often the first to champion government intervention in the economy. If we’re truly proponents of free markets, then we need to take responsibility for the results of people’s choices. This encompasses the beneficial and harmful effects alike. The free market is an enthusiastic supporter of experimentation and innovation. It also celebrates the spectacular failure from time to time.
Bitcoin: The Ultimate Disruptor?
Saylor’s bet isn’t only on Bitcoin – it’s on Bitcoin’s potential to disintermediate the entire financial system. He believes that Bitcoin acts as a hedge against inflation, as a store of value and as a decentralized alternative to fiat currencies. Is he wrong?
Consider this: while traditional finance is bogged down in bureaucracy and regulation, Bitcoin operates on a permissionless, peer-to-peer network. It gives power back to the people, cuts out the need for third parties, and creates a sense of financial independence that we’ve never had before.
There’s the increasing mainstream acceptance. Communities paving a path forward Lomond School in the UK recently began accepting Bitcoin for student tuition. JPMorgan, a titan of the traditional financial world, is preparing to deepen their blockchain-based payment services. These aren’t fluke occurrences, they’re symptoms of a larger movement indicative of a paradigm shift in how we perceive money.
Might Bitcoin be the great equalizer, the tool of the empowered individual that buys the time to destabilize the established financial order? Saylor undoubtedly believes that’s the case, and he’s backing up that belief with his cash.
Is He Blind or Visionary?
Let’s face it, the crypto market is rollercoaster. We've seen Bitcoin soar to dizzying heights, only to come crashing back down to earth (BTC rebounded above $85,100, a 15% increase from the previous week's low of $74,500). So, while SOL and ETH are breaking out with gains, other altcoins like BCH are in the red today. The current crypto landscape is a very treacherous minefield, one where even the most experienced investors can and will get burned.
So, is Saylor a visionary, or has he just gone mad with conviction? Or is he really doubling down on a failed path? Or is he smartly moving long game pieces for future payoff?
Ultimately, it’s too soon to know if Saylor’s wager is a masterstroke or colossally mistaken. One thing is certain: he's not afraid to take risks, to challenge conventional wisdom, and to bet on his own vision of the future. In a world that often rewards conformity, that's something to be admired, even if you disagree with his strategy. Now, I’m not recommending that you take out a second mortgage on your home to invest in Bitcoin. Maybe Saylor is identifying something really important that the rest of us are missing. Maybe, just maybe, that's worth considering. What do you think?
| Factor | Argument For Genius | Argument For Recklessness |
|---|---|---|
| Market Timing | Bitcoin's long-term potential remains strong; short-term volatility is irrelevant. | Market could crash further, leading to massive losses for MicroStrategy. |
| Diversification | Bitcoin is a strategic asset that diversifies MicroStrategy's balance sheet. | Over-reliance on Bitcoin exposes the company to undue risk. |
| Company Strategy | Saylor's vision aligns with Bitcoin's potential as a store of value and hedge against inflation. | He's turning MicroStrategy into a Bitcoin proxy, which is not the company's core competency. |
| Personal Belief | He's putting his own money and reputation on the line, demonstrating strong conviction. | His unwavering belief may be clouding his judgment and preventing him from seeing the risks. |
Ultimately, only time will tell whether Saylor's bet is a stroke of genius or a monumental blunder. But one thing is certain: he's not afraid to take risks, to challenge conventional wisdom, and to bet on his own vision of the future. And in a world that often rewards conformity, that's something to be admired, even if you disagree with his strategy. I'm not saying you should go out and mortgage your house to buy Bitcoin, but maybe, just maybe, Saylor sees something the rest of us are missing. And maybe, just maybe, that's worth considering. What do you think?
