Michael Saylor: Wall Street is Coming for Your Bitcoin
As the Bitcoin halving looms closer, MicroStrategy’s CEO Michael Saylor paints a vivid picture of Wall Street’s impending foray into the Bitcoin space. In a recent discussion at Die Bitcoin Konferenz in Innsbruck, Saylor articulated the pivotal events and shifts expected to shape the future of Bitcoin investments, highlighting three primary aspects:
The forthcoming Bitcoin halving, the anticipated introduction of a Bitcoin Spot ETF, and the changes in FASBs’ fair value accounting.
The Certainty of the Bitcoin Halving
The first thing Saylor pointed out was Bitcoin’s halving. And while it might seem abstract to many, its implications tend to ripple through the market dynamics of Bitcoin market. It happens every 110,000 blocks, or roughly every four years, and it cuts the rewards miners receive for adding new transactions to the blockchain by 50%.
While this algorithmic stipulation was built into Bitcoin to control its supply and, in turn, its value, it also influences miner behavior and, by extension, market dynamics. Saylor emphasized this event’s significance, explaining that miners “have to sell in order to pay their electricity bills & pay their debt expenses & their operating expenses.”
Post-halving, with the reduction in rewards, they will naturally have fewer Bitcoins to sell, and this reduction in selling pressure will likely tighten the available supply on exchanges, potentially putting upward pressure on the price.
With fewer Bitcoins being sold by miners, and assuming demand remains constant or increases, basic economic principles of supply and demand suggest that Bitcoin’s price could see a surge.
Watch Saylor’s interview at Die Bitcoin
Wall Street’s Bitcoin ETF Foray
Arguably the most effective thing on the Bitcoin price is the expected launch of a Bitcoin Spot ETF. Saylor believes this will act as a bridge between Wall St. and Bitcoin.
“And then we know there’s a spot Bitcoin ETF coming and when that comes, we plug into Wall Street and the entire banking system.”
What this means in practical terms is a simplification of the investment process for institutions and individual investors alike. Rather than navigating the often complex and unfamiliar terrain of cryptocurrency exchanges, private keys, and digital wallets, investors can buy into the Bitcoin ecosystem just as they would purchase shares of a company or units of a traditional ETF.
Saylor further elaborated on the uniqueness of this Spot ETF, pointing out why it is a better asset than any other ETF, inlcuding Gold’s which saw an explosion of price after it launched.
“You really have to say this is the first time we ever plugged Wall Street into an asset that you cannot produce any more of. And so nobody knows what will happen except that if you reason from first principles, you know that it’s got to actually perform better than all the other asset ETFs because the underlying fundamentals are just better.”
The launch of a Bitcoin Spot ETF could lead to a substantial influx of funds, signaling a newfound legitimacy for Bitcoin and of course have a major impact on its price.
Changes to FASBs Fair Value Accounting will Create More Interest in Bitcoin
With imminent changes to FASBs fair value accounting practices, Saylor anticipates a surge in corporate interest in Bitcoin. As these uncertainties get ironed out, more boardrooms could consider Bitcoin as a viable and attractive asset. Given the current asset dynamics where corporations primarily hold cash and bonds, Bitcoin’s introduction into this mix could lead to significant reallocations.
“And then finally, that fair value accounting is coming and when that happens the objective will go away.” By ‘objective,’ Saylor hints at the previous barriers or hesitations corporate entities might have had due to the perceived volatility or uncertainty surrounding Bitcoin’s valuation.
This change, according to Saylor, is not just a minor adjustment but could catalyze a significant shift in corporate perspectives on Bitcoin. He believes that as uncertainties related to valuation and accounting get streamlined, there will be a broader acceptance and understanding of Bitcoin in the corporate world.
Considering the current asset dynamics, where major corporations primarily hold their reserves in the form of cash and bonds, the inclusion of Bitcoin presents a fascinating scenario. Cash and bonds, traditionally seen as low-risk assets, offer predictability but often with lower yields, especially in low-interest-rate environments.
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With Bitcoin’s potential for higher returns (though coupled with higher volatility), Saylor envisions a significant reallocation, noting, “At the end of the day, corporations only hold 2 assets. They hold cash and they hold bonds, and so if Bitcoin is available as an asset pari passu to a bond, then you’ll see a reallocation from bonds to Bitcoin.”
This anticipated shift underscores the transformative power of changes in traditional accounting standards. As these standards evolve to accommodate and recognize the unique attributes of digital assets, they could pave the way for a broader, mainstream acceptance of Bitcoin in the world of corporate finance.
When Michael Saylor Speaks, Listen
As the lines between Wall Street and the decentralized world of Bitcoin begin to blur, we stand on the precipice of a monumental financial evolution. Sure, the price has been mostly bearish since November 2021, but with these three major events set to take place, it should have a major impact on the Bitcoin price.
Michael Saylor had his vision back in 2020, and he’s doubled down several times and it seems like Wall Street is finally listening to him.