MicroStrategy CEO Michael Saylor: Companies Have No Choice But To Buy Bitcoin
MicroStrategy CEO Michael Saylor insists two paradigm shifts ensure companies now have no choice but to buy Bitcoin.
Saylor puts his reasoning down to the new astronomical rate of monetary inflation, and Bitcoin becoming the first trillion-dollar truly global monetary network.
The MicroStrategy CEO explained Bitcoin now has the enviable position of being able to absorb much of the corporate balance sheets who now have to look outside of the standard cash or corporate bonds.
The Rate Of Monetary Inflation Will Drive Corporates To Bitcoin
Historically, corporate balance sheets consisted of cash and bonds, treasury bills etcetera, and as long as they were making a positive yield, usually above 6%, companies weren’t losing out.
However, according to Michael Saylor the monetary inflation is as high as 15-20%, so 6% return means companies are negative yielding between 9-14%.
Saylor says, ‘The amount of money being pumped into the economy tripled that has broken a bunch of conventional models,’ and explained we’d never had ‘a cost of capital that is so extreme.’
‘As the rate of monetary inflation increases, it tilts the balance of power in favour of scarce assets that are not valued based upon future cash flows,’ explains the MicroStrategy CEO.
The former MIT graduate says the fundamental challenge for a corporate treasurer today is the capital on their balance sheet is ‘toxic’ and will lose ‘half their purchasing power in just four years.’
‘Conventional treasuries strategies now have this problem because the negative real yield has gone from -2% to -15%, maybe -20%,’ said Saylor. ‘That means capital on the balance sheet is toxic. Their problem is they’re going to lose 50% of their purchasing power in just four years.’
Saylor Explains Bitcoin Is The First Truly Global Monetary Network
Companies now have to look for a different asset just to store their wealth. With monetary inflation so high, they will do very well to find a tech stock that maintains 20% growth over the next 5-10 years.
Step forward Bitcoin, which Michael Saylor says is the first truly global monetary network, one that can be freely moved around with ease.
‘Bitcoin is the first digital monetary network in the history of the world,’ explains the MicroStrategy CEO. ‘So for 5000 years we never had a sound monetary network circulating on a computer protocol.’
‘The closest thing we had was the gold standard… But in the 20th century it became too antiquated, too heavy and too cumbersome to work with so the gold standard got abandoned for fiat.’
‘In the 21st century we figured out how to put a billion-dollar block of money onto virtual gold in cyber space and we can move that around a million times faster, a million times smarter than we can with physical gold.’
From Speculative Asset To The Solution To The Problem In 12 Months
MicroStrategy CEO Michael Saylor explained Bitcoin has evolved from a ‘speculative, uncorrelated asset for visionaries and traders [that] wasn’t taken seriously by institutions’ to becoming the solution to the problem of monetary inflation that everyone is now facing.
Saylor said how after covid hit and monetary inflation rose people started waking up. We have seen this with the likes of Square Inc., MassMutual and Tesla among other corporates putting vast amounts into Bitcoin.
And with the price going from $5k to over $60k in the same space of time, only a fool would say it’s a coincidence.
Is Bitcoin the solution to to the problem? Well, cash and negative yielding traditional bonds aren’t. With Bitcoin now coming of age and establishing itself as a trillion-dollar asset, it’s becoming clearer for corporate treasuries.
MicroStrategy CEO Michael Saylor was speaking on Blockworks Webinar…