Saylor’s Bitcoin bet makes MicroStrategy envy of corporate world
MICHAEL Saylor’s MicroStrategy - a publicly traded company that provides business intelligence, mobile software, and cloud-based services - has become a powerful case study in the potential of Bitcoin as a corporate asset.
Since the company made Bitcoin the centrepiece of its treasury strategy in 2020, it has significantly outperformed traditional benchmarks, sparking widespread interest and debate in the financial world.
What initially seemed like a risky move has paid off handsomely, positioning MicroStrategy as a leader in the adoption of digital assets and dramatically boosting its stock performance.
In August 2020, the firm made headlines by announcing a $250 million purchase of Bitcoin as part of a broader shift in its capital allocation strategy.
Saylor, the company’s CEO, cited growing concerns about the devaluation of the US dollar and economic instability as reasons for this bold decision. The investment was initially seen as unconventional, if not outright risky, but the numbers tell a different story.
Since MicroStrategy’s first Bitcoin purchase, the company’s stock has skyrocketed.
Over the period from August 2020 to August 2024, MicroStrategy’s stock price has surged by over 400%.
In contrast, the S&P 500, a broad market index, has gained around 60% during the same period, while gold, traditionally seen as a safe-haven asset, has only increased by about 25%.
This remarkable outperformance has directly correlated with the rise in Bitcoin’s value, which has grown from around $11,000 per BTC at the time of MicroStrategy’s initial purchase to approximately $62,000 today – and this is at a time when there’s been a marked sell-off and price drop. It reached an all-time high price of $75,830 on March 14 2024.
MicroStrategy’s decision to embrace Bitcoin was driven by a belief in the crypto’s role as a hedge against inflation and a store of value.
With a fixed supply of 21 million, Bitcoin offers a level of scarcity that fiat currencies, subject to the whims of central banks and inflationary pressures, cannot match. As concerns about inflation have risen, particularly in the wake of massive fiscal stimulus and quantitative easing by central banks globally, Bitcoin has increasingly been seen as a viable alternative to traditional stores of value like gold.
MicroStrategy’s early and aggressive adoption of Bitcoin allowed it to benefit from this trend as more investors sought refuge in the digital asset.
Another factor in the firm’s success has been its position as a first mover in the corporate adoption of Bitcoin.
By being the first publicly traded company to make Bitcoin its primary reserve asset, it has differentiated itself from its peers and attracted a new class of investors interested in gaining exposure to digital assets through a conventional equity investment. This influx of interest has driven demand for MicroStrategy’s stock, further amplifying its gains.
Michael Saylor’s leadership has also played a crucial role. His vocal support for Bitcoin and his clear articulation of its long-term value proposition have resonated with both retail and institutional investors.
His confidence in Bitcoin, coupled with his strategic financial manoeuvres - including the issuance of convertible bonds to fund additional Bitcoin purchases - has reinforced investor confidence in MicroStrategy’s direction.
While Bitcoin is known for its volatility, MicroStrategy has turned this potential downside into an advantage. The company has strategically purchased Bitcoin during market dips, increasing its holdings at lower prices.
This approach, coupled with the leverage provided by bond issuances, has allowed the organisation to accumulate BTC at an accelerated pace, maximising its exposure to the asset’s subsequent price rebounds.
MicroStrategy’s success has broader implications for the corporate world.
Its performance has sparked a re-evaluation of traditional corporate treasury strategies, with some companies beginning to explore Bitcoin and other digital assets as potential components of their own balance sheets. As concerns about the long-term stability of fiat currencies continue, I’m confident that Bitcoin could become a more common feature in corporate finance.
As the shapeshifting of the global economy continues, MicroStrategy’s bold bet on Bitcoin may well be remembered as one of the defining corporate decisions of our time.
Nigel Green, deVere Group, CEO and founder
