Poking A Few Holes In The Microstrategy Strategy

Poking A Few Holes In The Microstrategy Strategy

By BitcoinGordon | BitcoinGordon | 13 May 2021


Gordon likes Michael Saylor... pass it on.

Okay, actually I don't know the guy, but I like that he is smart, organized, well-defined, well-spoken, and knows enough about what he is talking about to make his points on the fly.

In case you don't know, Saylor is currently acclaimed for having the company, MicroStrategy, with the highest number of Bitcoins HODL'd. I believe the number is 90,000 BTC and rising. Saylor is a firm Bitcoin maximalist, a die-hard HODLer, and if he suddenly starts spinning rhetoric that he has a plan for the right times to periodically sell, he would be among the best earning hypocrites in the space. Keep an eye on him and keep him honest.

So, I've established I am NOT anti-HODL, I am NOT anti-Saylor. Okay?

Now, I want to poke a few holes in a few things he has said in the famous video that is now a Bitcoin meme... Saylor's interview with Laura Shin.

In this video, Saylor stated "Bitcoin's never going down, Laura" and many points were raised around the comment. Saylor compared selling off some Bitcoin to take profit and choosing points of re-entry to things like trading electricity for horse and buggy, or selling a profit to buy more pesos against the dollar... you don't sell a superior item for a lesser one. An invigorated Saylor explained that the question was only pertaining to traders, who have a short-term mentality. He essentially insulted the entirety of the Crypto Twitter society, including the HODLers, who desire daily news about the field.

So, what I see is a man set in his convictions which will likely serve him well, as long as Bitcoin remains the dominant force in crypto. This is not entirely about market value and price, but eventually which technology becomes the most necessary and used.

In Saylor's view, he is choosing a superior form of money, the future of technology, the future of economics. These are all valid points, and again, if his strategy does end up being correct, it will just prove their bottom line more and more. But, I do see a few important flaws in his plan and comparisons made, though I already know they are going to prove unpopular. So, I ask that you keep an open mind.

The first issue is Saylor's view on traders.

Saylor takes offense to the notion that there is any validity to the mindset of a trader. He pushes that there is no way to make money trading, that it is essentially a flawed way of looking at economics on every level. He gazes towards the future of technology, not at short term trends. He doesn't care how Bitcoin moves up and down from month to month, year to year. I beg to challenge him on this at several levels. One would be that when MicroStrategy adds more Bitcoin to their HODL, he always announces the average price at which he has acquired it. I won't pick at this too much, because it goes to the fact that we all have to observe a financial instrument as exactly that: financial. The future of technology involves everything from nano-biotech to robots taking over careers. Digital currency and digital gold are only one small piece of future tech, and in this case, we talk about value more than any other solution Bitcoin resolves. 

Trading does not necessarily mean that a person takes a short-term view of an asset's value. It can, and should, however mean that a person is well-versed in how markets move and evolve over minutes, hours, days and weeks. One can be extremely tuned-in to months and years to follow and believe in the technology as a central logic to their trading strategy just as much as their willingness to understand the MICRO of the macro, so to speak. Irony... oh irony.

If I have a $10,000 investment, for example, and I believe Bitcoin is the future of money, I may seek a good price to enter a position on Bitcoin. If I got it low, and I wait for it to go up and sell, as a day trader with a track record of calling these things right, I'm fairly certain that the next time I enter a position, I'm going to end up with more Bitcoin. What is more, in the meantime my buys and sells are what adds the fluidity to the marketplace. When you make a $1B+ purchase of Bitcoin over months, the market is permitting you to do so because there are traders willing to let you have their coins at the market price. Otherwise, sorry we're all HODLing over here. The logic is a bit broken, and I'm about to prove it.

Mr. Saylor and those your thinking represents: with what did you purchase your Bitcoins, Sir?

When you borrowed in order to invest deeper into Bitcoin, what asset was used for the Bitcoin acquisitions?

When you borrow for cash flow, what digital asset are you using as collateral?

So, just to get this right, when purchasing Bitcoin, dollars were used, despite their lack of future-proof value. When acquiring Bitcoins, loans are taken out with this digital asset, but are paid in cash, an inferior transaction tool. The thing is, from borrowing to lending, buys to payments and cash flow, all of this transacting is TRADING. Business takes place day to day. Board members are paid in Bitcoin. Bills are likely paid in cash. Every time an asset is changing form it is traded from one to the next at the current market value. It all goes to his company(s) bottom-line.

Again, I'm not complaining, but there are comparisons made that are inaccurate, and the sentiment at the end of the day is that he values Bitcoin for its superiority and views it as a step backwards into the dark ages to sell Bitcoin at a profit in order to re-enter a better position for more profit. It is a trade-off, but one that a person can easily argue for, perhaps with more sound logic than against. The point that Gordon is arguing, is that we are ALL trading, and we are ALL aware of many of the day-to-day, weekly ebbs and flows of the market, because it DOES interest us.

Saylor gripes against those who speculate on the market and watch social media for short term events. Sorry, but among those things CT is watching, are those DAILY Michael Saylor TWEETS, Sir! Don't stop, we love it! But, don't rule thyself outside of the circle in which you poketh of the fun. You, dewd, often ARE the daily news of which we seek. Once properly meme'd upon, thou hast become the very thing of which you venteth forth against.

Secondly, Saylor's view as a long time HODLer as it pertains to investing in the future...

This not only means that Saylor is buying Bitcoin for his company's strategy because he believes it is an asset that will go up in value, but that the value is directly tied to the technology that it represents.

Let me address Saylor's Bitcoin as a financial instrument first, and then as it represents technology. The two are intertwined, but some distinctions are worth considering.

Bitcoin is a digital currency also acting as a store of value. To the degree that we view gold as a long term placeholder for value, we don't actively lug it around as a form of payment. If tragedy were to strike, we could take our gold, hock it at a local exchange or jeweler and free up some cash. With Bitcoin, there is an assumed utility as actual transacting payments, even though there are now dozens of coins that can transact faster, better, cheaper than Bitcoin. But, they do not have the network and long-term confidence of the public. Bitcoin also represents a store of value that literally means there are people that HODL with a refusal to sell under any short or long term condition, in which case it isn't a matter of whether they want or need to cash in on its value, but rather that they believe in what it represents.

While Bitcoin may represent the future of money and the future of stores-of-value, it is not 100% guaranteed that it is THE cryptocurrency that will BE the future of money. It may represent this as such, but nobody can guarantee that another project cannot gain the proper footing, or the proper regulatory strength to surpass Bitcoin, at which point any project could technically borrow from the best elements of Bitcoin while representing a stronger global confidence in the technology. To that point, a 'better' Bitcoin would not automatically translate to Saylor being right about his investment. Having a ton of Gold is great, but if Silver eventually proved superior, being in the same category doesn't mean you called that category right.

I do agree with Saylor that Bitcoin is the superior money when compared to the dollar or the peso. What I don't agree with is the level of confidence he has that he's selected the only future-directed solution to superior money. Bitcoin is the top, the most recognized, but we are certainly seeing that a few billionaires and a ton of kids with no clue about money can take a meme and over-run the value of half of the stock market. This clown-world is getting real! Who is to say that a 14th gen iteration of a freakin' mutt coin doesn't end up being the global gold standard? At this stage, nothing would shock me.

Next, as it pertains solely to currency, the fight is already on for 'official' state centralized money, CBDC's. The banks, bankers and governments of the world are keen... they are on to us, so to speak. The war over a global standard is on, and although I believe the top 4 coins (one of which is undeserved) are given a pass, they will be a form of manipulated yet highly regulated tools for gambling, leverage and investing, which CBDC's likely are where our dollars and pesos transition... not Bitcoin. I would prefer it be Bitcoin, but the governance overseeing us all does not wish for this.

My point is that I agree with Saylor's logic, but being future-centric and understanding the direction this is all headed does not mean there is a guarantee he has chosen the one, absolute winning horse. There are numerous factors that can, and will throw off the value on the way to scarcity, and though I have continuously addressed many of these repeatedly, I am but a ghost... a mist a phantom in the midst of this market and others will pile on in awareness at a later date. That is fine. I will do my best not to gloat.

At the end of the day, I appreciate Saylor's brilliant projection of strategies people can utilize to put Bitcoin to work for their bottom line, as an asset, as a store of value, as a means to increase the value and flow of liquidity, and to increase one's business growth in a future-looking time. This may not necessarily be exclusive to the HODL mentality, if a person has unique skills to make time-specific moves at market to further increase their gains on the way to that future. One could even argue that it is leveraging the same weakness in fiat to secure more Bitcoin at market utilizing shorter term trades. In the end, we're all hoping for a stronger economy for more people, and that is a future I can get behind.

And on that note, Bitcoin Gordon Freeman poises to pounce on the next dip in a will to make more profit towards a better tomorrow!

And for now... said above with intentions set forthwith above... out.

 

 

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BitcoinGordon
BitcoinGordon

Hi! I'm Gordon Freeman (I hear they made a likeness of me in some video game... totally unrelated... or...).


BitcoinGordon
BitcoinGordon

Welcome! This is my blog for all things crypto, from my day trading and tutorials to general crypto news.

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