During the fourth quarter of 2020, Michael Saylor transitioned from being a regular tech executive to an advocate of Bitcoin adoption. Known for co-founding software company Strategy, formerly MicroStrategy, Saylor took his first step into crypto by purchasing $250 million in BTC using the firm’s cash.
At the time, Saylor said the move to acquire Bitcoin was to shield the company against inflation as the dollar weakened. Notably, the BTC purchase was the largest by a US publicly traded firm.
Before the end of 2020, Strategy raised $750 million to acquire more BTC, expanding its total holdings to more than $1 billion. While critics called this move “a reckless gamble,” Bitcoin supporters labelled it as “a hedge against rising inflation.”
How is Saylor’s Strategy Financing Its Bitcoin Purchases?
When Saylor announced plans to add Bitcoin to Strategy’s treasury in August 2020, he said the firm would make one BTC purchase per quarter. But in the months that followed, the tech firm adopted a new plan, which involved buying Bitcoin almost every month regardless of the coin’s price.
Many thought Saylor would stop buying Bitcoin in 2022 when the asset rose to $69,000 and then plunged to $16,000. But the tech guru remained unshaken, with his company adding more BTC using the dollar-cost average strategy.
So, where does he get the money to buy Bitcoin? Saylor issues stock and debt to finance the Strategy’s BTC purchases.
Strategy and Sailor’s BTC Holdings
Does Saylor hold Bitcoin himself? One may ask. The simple answer is yes! Saylor bought at least 17,500 BTC in 2020 before his company made its first purchase. Since then, he hasn’t announced any additional Bitcoin acquisitions.
Strategy, on the other hand, holds over 638,000 BTC or about 2% of the total supply, making it the largest institutional Bitcoin holder. According to data from Saylortracker.com, a platform that shows details of Strategy’s Bitcoin holdings, the average purchase price is $73,913, and the unrealized profit on the investment sits at $27.2 billion.
What to Learn From Saylor’s Obsession With Bitcoin
Here are some lessons from Saylor’s Bitcoin journey:
1. Research thoroughly before committing: Saylor understood the fundamentals of BTC that make it a shield against inflation before injecting the company’s funds into the asset. So, retail investors should avoid buying coins out of FOMO and instead do their homework first.
2. Think long term: Given that Saylor hasn’t booked profits since 2020, it’s a sign that he isn’t here to make quick cash. That also suggests that holding Bitcoin in the long term yields greater returns.
3. Do not try to time the market: Saylor’s decision to use dollar-cost averaging rather than waiting for price dips to buy has proven to be a profitable strategy.
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