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Highlights
- MicroStrategy aims to be the world's largest Bitcoin bank.
- The company's strategy is to borrow to buy more Bitcoin.
- MicroStrategy's actions could boost Bitcoin's price and adoption.
In a recent interview, MicroStrategy’s founder and executive chairman, Michael Saylor, unfolded his audacious vision for the company’s future. He wants to make this company the largest Bitcoin bank.
This could be a high-demand driver for Bitcoin, affecting price trajectory. If successful, the strategy would set the stage for increasing numbers of businesses to make Bitcoin a key component in their financial operations and legitimize BTC in global markets.
MicroStrategy’s Bitcoin Plan Could Boost BTC Prices
MicroStrategy’s announcement of its transformation into a Bitcoin bank signals a sea change in how institutional players might interact with BTC. The company’s aggressive acquisition strategy could increase demand for the cryptocurrency, potentially driving up Bitcoin price as the company continues to accumulate large amounts of BTC.
Additionally, positioning Bitcoin as a key financial instrument could attract more institutional investors, further boosting Bitcoin’s market value and long-term price stability.
Emphasizing the role of borrowing capital to buy more Bitcoin, rather than lending it out, puts a more significant premium on long-term positioning Bitcoin as an asset.
The company is currently trading at $197.45, approaching a critical breakout level above $200. It has seen strong buying interest, and if past trends hold, Bitcoin’s price may soon follow suit.
According to Michael Saylor, the most significant Bitcoin bank would develop Bitcoin-based financial instruments such as equities, convertible securities, fixed-income instruments, and preferred shares.
He also thinks Bitcoin has become the best-performing asset of the century and considers MicroStrategy to be at the forefront of creating Bitcoin capital markets.
Targeting $1 Trillion Valuation Through Bitcoin Dominance
Michael Saylor sees Bitcoin as the ultimate digital capital, a term meaning an asset that outpaces inflation and locks up long-term value.
He says the more volatility in Bitcoin, the better it appeals to high-return investors. Saylor also positions MicroStrategy to cash in when Bitcoin becomes an integral component of every institutional and retail portfolio.
He sees the company doing $20 billion in convertible debt, another $20 billion in preferred stock, and $10 billion in various forms of debt, letting the company hold as much as $150 billion in Bitcoin. As he explained, his firm trades at a premium with more volatility and annual recurring revenue, setting the foundation for potentially massive growth.
From this position, he believes the company could grow into a company valued between $300 billion and $400 billion, dominate equities and options markets, and expand into the fixed-income markets by constantly raising capital to buy more Bitcoin. Michael Saylor’s long-term ambition is to make it a trillion-dollar company.
The company also said it plans to advance its Bitcoin acquisition strategy with a new position. The firm recently posted a vacancy on LinkedIn to hire a Bitcoin Advocacy Manager.
Michael Saylor said Bitcoin currently represents just 0.1% of the world’s financial capital, but by 2045, it could be 7%, driving the price of Bitcoin to $13 million per coin. As long as U.S. capital markets let MicroStrategy raise funds through debt, equity, and other financial instruments, the company intends to scale aggressively, taking advantage of what he sees as a 29% annual growth rate for Bitcoin.
However, the core of the strategy is an arbitrage play between dollars and Bitcoin: position the firm to benefit from the latter’s long-term appreciation.
Saylor’s Bitcoin Strategy: Borrow, Do not Lend
What is unusual in Michael Saylor’s strategy regarding Bitcoin is that, unlike traditional banks, he does not lend it out. Instead of loaning money with Bitcoin, MicroStrategy borrows money to buy more of the asset.
According to him, this is because the underlying growth rate of Bitcoin itself is enough reason to continue borrowing, and he is not planning on lending any of the company’s stash of Bitcoin. He has told reporters:
“It is much wiser to borrow one billion dollars from the fixed income market and lend it to Bitcoin with a return rate of 50% per year, without counterparty risk, compared to reversing the equation and finding someone that will pay me 12%-14%.”
He regards lending to governments, corporations, or people as much riskier than what he refers to as “lending to Bitcoin,” which, in simple terms, means investing more in the cryptocurrency. This approach for MicroStrategy reflects his confidence in Bitcoin’s long-term value and growth potential.
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