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Strategy Executive Chairman Michael Saylor reiterated the company’s dedication to a long-term bitcoin strategy following substantial losses in the fourth quarter and a persistent decline in prices early this year.
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What to know:
- Michael Saylor dismissed concerns that Strategy would need to sell bitcoin due to price drops, reaffirming that the company has no intention of halting further acquisitions of BTC.
- Saylor characterized the volatility of bitcoin’s price as both a risk and an inherent aspect of “digital capital,” asserting that it will surpass traditional assets over the next four to eight years, and emphasized that the firm’s balance sheet holds no credit risk.
Concerns that Strategy (MSTR) might be compelled to liquidate bitcoin amid declining values are “an unfounded concern,” chairman Michael Saylor stated during a CNBC interview, confirming the company’s ongoing commitment to purchases.
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“Our net leverage ratio is half of that of a typical investment grade company,” Saylor remarked. “We have 50 years of dividends and bitcoin, plus two and a half years’ worth of dividends in cash on our balance sheet … we’re not planning to sell; we intend to continue purchasing bitcoin. I anticipate we’ll be acquiring bitcoin every quarter indefinitely.”
Recently, the company increased its holdings by 1,142 BTC for approximately $90 million, at an average price of $78,815 per coin. The total amount now stands at 714,644 coins, acquired for about $54.35 billion, resulting in an average cost per bitcoin of $76,056 — significantly higher than the current price of around $69,000.
Saylor’s remarks come as bitcoin has experienced notable volatility (predominantly downward) in recent months, although he pointed out that fluctuations are an intrinsic part of the asset. “The key to remember is that bitcoin is digital capital,” he elaborated. “It’s expected to be two to four times more volatile than traditional capital such as gold, equities, or real estate. Furthermore, it’s projected to have two to four times the performance of traditional capital this decade. It is the most beneficial global capital asset available, allowing for greater leverage and more versatile trading options than any other kind of capital asset. Therefore, while volatility can be seen as a drawback, it is also a defining characteristic.”
Strategy recorded an operating loss of $17.4 billion and a net loss of $12.6 billion for the fourth quarter, primarily due to non-cash mark-to-market accounting associated with bitcoin’s price decrease. These results illustrate how fluctuations in the cryptocurrency’s value continue to impact the company’s financial reports, despite its long-term investment approach.
Saylor also discussed the idea that bitcoin’s current price levels might signify a new phase of market maturity, which he interpreted as a positive development.
Strategy’s balance sheet and its digital credit operations are crucial to its overall strategy, Saylor noted. The firm’s digital credit framework has become one of the most actively traded credit instruments of the decade, yielding significantly higher cash flow compared to traditional fixed-income options and surpassing the trading volume of preferred stocks.
“There is no credit risk associated with the company’s balance sheet,” he stated.
Saylor refrained from providing a short-term bitcoin price forecast but expressed confidence in its long-term potential. “I don’t typically make predictions for a 12-month period. I believe bitcoin will outperform the S&P by two to three times over the next four to eight years. That’s the only information we need to focus on.”
Shares of the company fell by 3% on Tuesday, resulting in a year-to-date decline of 15% and a year-over-year decrease of 60%.
