Bitcoin continues its unprecedented climb, closing in on the $100,000 milestone after reaching $99,500 earlier this week. But not everyone is celebrating Bitcoin’s meteoric rise.
MicroStrategy, the largest institutional holder of Bitcoin, saw its shares fall by 16% after Citron Research disclosed its short position against the company.
Citron’s report praised Bitcoin and MicroStrategy Chairman Michael Saylor, while arguing that the company’s valuation has become “disconnected from Bitcoin’s fundamentals.” Michael Saylor joined Squawk Box to address these concerns and defend the company’s business strategy.
Saylor described MicroStrategy as a “Bitcoin treasury company” that operates with a unique model designed to maximize Bitcoin’s returns. He explained that the company leverages Bitcoin’s volatility through stock premiums, convertibles, and fixed-income securities, and passes that value on to shareholders. According to Saylor, the company’s stock offers “2x BTC, 2x volatility,” appealing to investors looking for greater exposure to Bitcoin.
Noting recent successes, Saylor noted that MicroStrategy recently completed a $4.6 billion at-the-market (ATM) offering with a 70% Bitcoin spread, generating nearly $3 billion in five days. Similarly, a $3 billion convertible note raised this week with an 80% Bitcoin spread generated $2.4 billion. Saylor estimates that these moves could add more than $30 billion to shareholder value over the next decade.
When asked about the inherent risks of a leveraged Bitcoin position, especially during a downturn, Saylor acknowledged that there is a possibility of a “Bitcoin extinction-level event.” However, he downplayed such a scenario, citing Bitcoin’s 60% steady annual growth rate (ARR) and long-term ARR expectation of 29% over the next 21 years.
“Every long investor at MicroStrategy is a Bitcoin maximalist or advocate,” Saylor said, adding that the company is well-positioned to succeed even if Bitcoin experiences short-term pullbacks. “Even if Bitcoin drops to $70,000, we will still make billions of dollars in profits through our arbitrage strategies,” he said.
Saylor also weighed in on MicroStrategy’s comparisons to Bitcoin ETFs, suggesting that MicroStrategy offers unique advantages. Unlike ETFs that primarily hold overnight deposits, MicroStrategy has $35 billion in “permanent capital,” allowing it to issue long-term bonds and benefit from high Bitcoin spreads. For investors, Saylor suggested three options: direct Bitcoin investments, Bitcoin ETFs, or MicroStrategy’s leveraged Bitcoin strategy.
The executive also touted the company’s convertible bonds as an ideal investment vehicle, stating that they provide downside protection while providing exposure to Bitcoin’s upside risk.
Saylor ended the discussion with a bold prediction: Bitcoin could reach $13 million per coin by 2045, Saylor said, citing the asset’s unparalleled performance as a store of value. “Every Bitcoin you don’t buy today will cost you $13 million in the future,” he warned.
*This is not investment advice.