The price of bitcoin may be falling but Michael Saylor has dismissed any suggestion that he is worried about a potential ‘crypto winter.’ The MicroStrategy CEO remains as bullish as ever and pointed out that, ‘no one has ever lost money holding bitcoin for four years.’
The comments came in an interview with Emily Chang on Bloomberg’s Studio 1.0 on Jan 20. The two covered a range of topics over the course of the twenty-minute interview including the dot come bubble and Saylor’s early life and love for science fiction.
Saylor ‘going to buy a lot more’ bitcoin
For crypto proponents, the highlight of the interview came when Chang asked Saylor whether he was feeling the cold of a potential crypto winter. Saylor made it clear to the host that he was playing a longer game.
“If you’re going to invest in bitcoin a short time horizon is four years, a [medium] time horizon is ten years. The right time horizon is forever,” said Saylor as he self-avowed his diamond-hand status. “Warren Buffet said, ‘If you wouldn’t hold it for ten years you shouldn’t hold it for ten minutes.’ If you look over the course of four years, no one has ever lost money holding bitcoin for four years.”
While Saylor remains content to HODL, Chang pressed the CEO on exactly why BTC was currently facing a downturn. Here Saylor identified a friction point in the market between bitcoin which he describes as ‘the world’s least risky asset to hold over the next century’ and the wider crypto market which he calls the world’s ‘most volatile fast-money market.’
“They’re both conjoined, joined at the hip, for better or for worse in 2022,” he concluded.
This however was not enough to put Saylor off increasing his bags.
“Yeah, we’re going to buy more,” he told Chang.
Feeling nervous Michael?
In a masterclass of pointed questioning, Chang asked Saylor if holding so much bitcoin ever made the CEO feel nervous.
“No, actually it gives me great comfort,” said Saylor. “I don’t really think we could do anything better to position our company in an inflationary environment than to convert our balance sheet to bitcoin, because we’ve basically built our balance sheet on a non-sovereign store of value that’s not a currency derivative.”
“Two years ago we were sitting on a bunch of cash, and that cash was losing around 10% of its purchasing power a year. Then when Covid struck and the Fed took a more accommodative monetary policy, that cash started to lose 25% of its purchasing power a year.”
“My anxiety was maximized around April-May of 2020 when we had the K-shaped recovery and I realized that cash is trash – everything’s about to get much more expensive and we needed a strategy. So we adopted a bitcoin strategy, its driven up our stock by a factor of five. In my opinion, it saved the company from a not very pleasant fate. I’m totally pleased with where we are today.”
A K-shaped recovery is an asymmetric financial recovery in which some sectors return to growth while others remain persistently in the doldrums. Following the recent economic downturn in part caused by COVID-19 mitigation strategies, some areas of the economy, including technology and retail, have bounced back. Other areas of the economy, including travel and hospitality, have struggled to find a pathway to recovery.
The SEC has its say
While Saylor was talking up the benefits of bitcoin on MicroStrategy’s stock price, the SEC has been pushing back on MicroStrategy’s unconventional accounting practices.
For some time MicroStrategy has pushed to have American accounting standards updated, going as far as to lobby the Financial Accounting Standards Board (FASB) in September of 2021. Specifically, the company cites issues with ‘impairment charges’ which ‘cannot be reversed.’
“As a result, subsequent increases in the market price of a digital asset are not reflected in the digital asset’s reported carrying value on an entity’s balance sheet,” states the MicroStrategy appeal.
Reports from CNBC and Bloomberg this past week have now confirmed that the SEC has rejected this line of argument.
“We note your response to prior comment 5 and we object to your adjustment for bitcoin impairment charges in your non-GAAP measures,” said the SEC. “Please revise to remove this adjustment in future filings.”
Following the news, the price of MicroStrategy (MSTR) stock fell rapidly. The MSTR share price currently sits at $401, down 17.59% since last week. The rapid price fall suggests that even if Saylor may not feel the icy chill of crypto winter, he may find it much harder to ignore the SEC when it decides to turn up the heat.
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