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MicroStrategy Currently At a Loss, But Will Keep Buying Bitcoin

MicroStrategy owns more bitcoin than any other private company in the world. They’ve only started buying it in August 2020, and have amassed more than 100,000 bitcoin to date. In order to obtain such a large quantity of bitcoin, they used the entirety of their cash reserves, took out several loans, and sold additional shares for their business.

As of the end of Q2 (June 2021), they’re down approximately $700 million on their investments in bitcoin. This doesn’t seem to be phasing Michael Saylor, the CEO of MicroStrategy. He is adamant that the company will continue to buy bitcoin, despite the current state of their investments. There are a couple of factors at play here, so let’s dig into exactly what strategy MicroStrategy is trying to employ here.

Microstrategy founder Michael Saylor is as bullish on Bitcoin as they come.

Kicking Off Institutional Investment

If you were to ask the bitcoin community when institutions officially got started, most would say around the time that Michael Saylor got into Bitcoin.

MicroStrategy’s investment strategy began with them trying to de-risk their USD denominated cash reserves. An ideal scenario for them would be for a multitude of investors to join them in their race to accumulate bitcoin. The longer bitcoin stays close, or under their net purchase price, the happier Michael Saylor is. They’ve been able to accumulate more bitcoin, for less USD for the last 3 months that bitcoin has been trading sideways. Sooner or later, the endgame of their investment thesis will be triggered.

Institutional FOMO

The endgame for Michael Saylor is to trigger a sort of “institutional FOMO”. That is, accumulate so much bitcoin and squeeze the available supply on the market to the point that the price gets pushed up. At a certain point, institutions will have to realize that NOT owning bitcoin is more of a risk for them than the investment itself.

At this point, a fear of missing out will sweep across notable corporations and institutions all over the world, forcing them to add bitcoin to their portfolios. Depending on the circumstances and timing of this frenzy, it would send MicroStrategy’s bitcoin holdings well into the state of being profitable.

We already got a taste of this in the first three months of 2021. Companies like MassMutual, Tesla, and Square all have bought significant amounts of bitcoin in the first quarter. This is really just the beginning though, as rumors that Apple, Facebook, Google, and Amazon are all considering entering the cryptocurrency industry in their own unique way. Whether or not this means they will buy bitcoin is yet to be determined. One way or another, the social and political sway that these companies hold over the public will put eyes on cryptocurrency in a big way.

The idea to remember though, is that bitcoin is the lifeblood currency of the internet of money. If any of these companies should decide that not having bitcoin is too big of a risk, then the entire game changes. Hyperbitcoinization no longer looks like a fantasy as companies compete to purchase billions of dollars worth of bitcoin.

Keep Buying Bitcoin

Michael Saylor had this to say in a recent statement about their investments.

“We continue to be pleased by the results of the implementation of our digital asset strategy… Going forward, we intend to continue to deploy additional capital into our digital asset strategy,”

These are the words of someone who is either in denial about their $700 million paper loss, or someone who is comfortable and confident in their investment. My money is on the second. Michael Saylor has been a consistent ultra-bull since the time they announced their allegiance to bitcoin. What’s more is that Saylor has a well-established track record of calling technologies or companies that are in the pre-hyperbolic growth stage. In 2012 he wrote the book “The Mobile Wave” wherein he predicted the rise and proliferation of many digital technologies, and the companies that will bring them to the world.

In the book, he states that everything we use in the world will become digital in some way, including our wallets. Although he wrote the book in 2012, and was a dismissive of bitcoin until 2020, he was predicting his own future.

The book led him to make predictions about which companies and technologies would win on the market. Michael is a man who puts his money where his mouth is, leading him to invest in the worlds most successful tech companies earlier than most. So Michael Saylor is not just some “giga-chad” sensational bitcoin investor. He owns a mobile intelligence company, whose tagline is “Intelligence Everywhere”. He is a seasoned technology company investor and identifies trends in the world of technology for a living.

Paper Losses vs. Realized Losses

The media that has been covering MicroStrategy’s “paper losses” are very focused on relaying the message that they’re down on their investments in USD terms. It is evident that they haven’t listened much to Michael Saylor speak. If they had, then they would be covering the metric a little differently.

MicroStrategy has been steadily accumulating bitcoin, an asset that can not be diluted, seized, or otherwise inflated away from their possession. In August of 2020, MicroStrategy started with owning about 0.2% of the entire supply of bitcoin. That number now stands at about 0.5%.

MicroStrategy hasn’t lost a thing. They’ve only gained bitcoin in the last 12 months, and haven’t sold a single satoshi. This means that their realized losses are effectively 0. A fact that the mainstream media covering MicroStrategy’s quarterly report has conveniently failed to mention. Here at CryptoVantage, we can see exactly what MicroStrategy is doing. Accumulating with diamond hands, and demonstrating a masterful strategy of hodling bitcoin.

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About the Author

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Go Full Crypto, a project that documents his journey of totally opting out of traditional financial services. Keegan has been living entirely off of cryptocurrencies since 2019.

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