Michael Saylor’s BTC binge-buying can’t stop ‘number go down’

Getting your Trinity Audio player ready...

Michael Saylor’s BTC buying spree shows no sign of letting up, but his big buys are proving incapable of sustaining BTC’s fiat value bubble.

On December 30, Saylor’s business data analytics firm turned BTC vessel MicroStrategy (NASDAQ: MSTR) announced its acquisition of 2,138 BTC tokens between December 23-29. This marked the eighth consecutive week that MSTR announced a big BTC buy and brought the company’s total BTC cache to around 446,400 tokens, around 2.1% of the total 21 million BTC that will ever be issued.

This latest batch of tokens was purchased for a total of $209 million, pushing MSTR’s total BTC outlay to date to $27.9 billion, while the tokens are now currently valued at around $41 billion. Originally, MSTR funded this spree with cash on hand but has since shifted to a combination of issuing new shares and taking on billions in new debt.

MSTR’s break-even BTC price now stands around $62,257, but this figure has been nudging upward as Saylor continues to buy. Saylor’s second-latest binge acquired 4,262 tokens at an average cost of $106,662, significantly higher than their current value.

Early on December 30, BTC was trading around $94,000 but abruptly dipped to $91,400 for reasons (as always) not entirely clear. News of Saylor’s wallet reopening appeared to restore the price above $94,000, but only for a matter of a few hours before the token slipped back below $92,000.

When 2024 began, BTC was worth around $42,000 but soared to $68,000 by the time of America’s November 5 election. BTC’s breathless post-election rise to over $108,000 has largely been driven by Saylor’s purchase of around 167,000 tokens since October 31. It begs the question of what might happen if Saylor stopped pouring gasoline on this digital asset dumpster fire.

Sell, sell, sell!

Saylor shows no signs of ceasing his pyromaniac ways. In November, MSTR announced its plan to fund more BTC buys by raising up to $42 billion through a combination of issuing new shares and taking on new debt. On December 23, MSTR formally announced a proposal to increase its number of Class A common shares from 330 million to 10.33 billion. The company also wants to take its preferred shares from five million to 1.005 billion. The proceeds from issuing these shares will be used to fuel additional BTC purchases.

It’s been suggested that MSTR might be compelled to halt its BTC buys once the calendar flips to January. Publicly listed companies have traditionally paused insider trading activity in the 2-4 weeks before issuing their quarterly reports, which MSTR will do in early February. The suggestion is that MSTR might be barred from issuing any new notes to fund additional BTC buys.

But given that this is more a gentlemen’s agreement than a hard regulatory edict, Saylor will likely keep buying—if only to avoid the unwelcome plunge that BTC will almost certainly take if he closes his wallet and no one else steps into his BTC sugar daddy role.

With MSTR now serving as a BTC-based exchange-traded fund (ETF) in all but name, it should be no surprise that the company’s share price has mirrored BTC’s value bubble. But MSTR’s market cap vastly exceeds the worth of its BTC stacks, a phenomenon for which no one has offered a satisfactory explanation beyond buying MSTR being easier for some BTC neophytes than opening a crypto exchange account.

MSTR warns investors that buying shares doesn’t entitle them to ownership of MSTR’s BTC stacks. And Saylor himself has been caught fudging the facts regarding what might occur should MSTR’s 0% interest notes be called following a crash in MSTR’s share price.

Having traded as low as $114 in early September, the shares brushed $475 in the weeks following the election, although they’ve since given back much of those gains. Irrational exuberance appears to be giving way to pragmatism, and perhaps a little embarrassment, as MSTR’s most recent BTC buy caused the stock to slide 7.7% on Monday and the shares lost another 4.4% on Tuesday.

Endangered whales

An infographic made the rounds just after Christmas, showing the top 60 BTC HODLers in terms of number of tokens held by corporate entities. Naturally, MSTR led the list, with more than 10x the stacks of runner-up MARA (NASDAQ: MARA), the block reward mining outfit that recently embarked on a similar ‘BTC treasury’ strategy. Miners accounted for four of the top 10 HODLers, with several other miners in the 11-20 rankings.

Saylor himself retweeted the infographic, part of his relentless efforts to convince others to follow him down the ‘sell everything you own and buy BTC’ path he embarked on a couple of years ago. Every entity that takes the bait earns public shoutouts from Saylor.

Saylor has painted this advocacy as part of his altruistic mission to save everyone from financial ruin, but most people who believe they’ve found a surefire path to riches tend not to share this secret with others. It’s that deviation from the norm that makes others suspect that Saylor knows he’s grabbed a tiger by the tail and dare not let go, at least not until he can convince others to grab hold so he can cash out quietly and leave them to their fate.

Not everyone is swayed by Saylor’s gospel. Microsoft (NASDAQ: MSFT) shareholders overwhelmingly rejected a recent proposal to adopt a BTC reserve strategy. Saylor had delivered a three-minute pitch to MSFT shareholders that evidently laid an egg, perhaps because MSFT actually makes money from its core business, unlike MSTR, whose data analytics operations now lose millions every quarter.

In that same sense, one can understand the motivation of BTC miners adopting a HODLing strategy. The unprofitability of mining was already pushing miners into more lucrative activities (like serving as AI data centers), so ditching mining in favor of a ‘number go up in perpetuity’ faith-based system may have been inevitable.

BTC reserve: not just for kids anymore

Saylor has also been actively promoting the idea of the U.S. federal government building a ‘BTC reserve.’ This is the fever dream of every BTC bagholder looking to the evil government overlords they once claimed to despise to provide their exit liquidity.

Just before Christmas, Saylor published a document titled Digital Assets Framework, Principles, and Opportunity for the United States. The document included a pitch for a ‘Strategic [BTC] Reserve’ “capable of creating $16–81 trillion in wealth for the US Treasury, providing a pathway to offset national debt.”

Saylor followed up this document with a tweet that claimed his proposals could “strengthen the US dollar, neutralize the national debt, and position America as the global leader in the 21st-century digital economy—empowering millions of businesses, driving growth, and creating trillions in value.”

Saylor and his ilk have been pushing the notion that foreign governments might beat America to the punch by building their own BTC reserves, playing on President-elect Donald Trump’s competitive instincts. The ‘crypto’ media has played its pliant part, duly hyping reports of other governments even contemplating such a strategy.

Trump appeared to echo these talking points in a mid-December interview with CNBC, saying, “we’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead.” But Trump hasn’t yet offered any specifics on what ‘something great’ might mean.

It’s unclear what other purpose BTC might have at this point. Saylor has publicly rubbished the idea that BTC could ever serve as a currency, instead likening BTC to ‘digital real estate.’ He’s not wrong that BTC will never serve as a means of exchange, its protocol having been neutered by the BTC Core developers who preferred ‘digital gold’ to peer-to-peer electronic cash.

As for what does qualify as digital currency, a December interview saw Saylor cite stablecoins like Tether’s USDT and Circle’s USDC. In that same interview, Saylor said the controversial Tether should move to New York City if the U.S. were to “create a normal regime to issue digital currency backed by U.S. treasuries.” Saylor also appeared to call for a return to the ‘wildcat banking’ era of the mid-19th century, in which banks could issue their own digital assets.

Oh yeah, this will end well…

Watch: Bringing the Metanet to life with Teranode