Investor Michael Saylor, affiliated with MicroStrategy, is Rapidly Purchasing Bitcoin in Bulk
Investor Michael Saylor, affiliated with MicroStrategy, is Rapidly Purchasing Bitcoin in Bulk
Michael Saylor, head honcho at MicroStrategy Inc. (MSTR, up 4.20%), has been on a Bitcoin (BTC, down 0.47%) shopping spree, and it's no exaggeration. Since August 2020, MicroStrategy has bagged 279,420 Bitcoins worth around $25 billion at current prices. That's almost 1.5% of all Bitcoin currently circulating.
And the spending spree doesn't seem to be slowing down. In fact, Saylor is ratcheting up his efforts to snap up as much Bitcoin as he can, as quickly as he can. Case in point, his new strategy to invest $42 billion in Bitcoin over the next three years. So if this billionaire is buying Bitcoin left and right, should you follow suit?
"I'll keep purchasing at the peak"
Saylor's made it clear on multiple occasions that Bitcoin is the top-tier investment class, and there's nothing he'd rather sink his money into—not gold, not property, and absolutely not the S&P 500. He's all in on Bitcoin, both personally and for MicroStrategy.
Even if you're a Bitcoin doubter, you've gotta admit that its past decade of performance is nothing short of remarkable. It's consistently been the best-performing asset class globally, and it's rarely been close. Bitcoin's already up 115% this year, following a 150% boost last year. And when you discount the 2022 drop, Bitcoin delivered annualized returns of 230% from 2011 to 2021.
The Bitcoin skeptics may caution that it's overpriced right now, but Saylor's response is simple: "I'll keep purchasing at the peak." In other words, he isn't sitting around waiting for a Bitcoin drop to buy the bottom. As Saylor sees it, we're in the early stages of a new decade-long "Gold Rush" period for Bitcoin, and the time to buy is now.
The Bitcoin's future growth potential could be mind-blowing. Saylor's even predicted that Bitcoin could be on a track to hit $13 million per coin by 2045. And that's the conservative estimate. The ultimate bullish view, says Saylor, is for Bitcoin to hit $49 million per coin.
New paths to Bitcoin exposure
In his relentless pursuit of Bitcoin exposure, Saylor's constantly exploring innovative strategies. This year, for example, he's championed the idea of using convertible debt offerings to fund Bitcoin purchases. It's a way to get around MicroStrategy's limited cash for mega Bitcoin buys.
MicroStrategy also recently announced a three-year (2025-2027) strategy called the "21/21 Plan." It aims to raise $42 billion in new capital over the next three years, which can then be used to buy as much Bitcoin as possible. That's a huge sum, considering MicroStrategy already owns $25 billion worth of Bitcoin.
And in the long-term, Saylor envisions a time when MicroStrategy evolves into a "Bitcoin bank" that exclusively deals in Bitcoin and Bitcoin-denominated assets. That way, his only investment will be in Bitcoin and not fiat currencies like the U.S. dollar.
Is diversification a myth after all?
Given that approaches like MicroStrategy's go all-in on Bitcoin, it comes with certain risks. The most significant one is diversification risk. The basic investment rule is that you should diversify your portfolio to minimize downside risk. You don't want to put all your eggs in one basket.
And that's especially important with Bitcoin, renowned for its volatility. Throughout its history, Bitcoin has suffered at least five periods of decline when it's lost 77% or more of its value. The less severe declines include 20%, 30%, and even 40%. Right now, some analysts predict a drop taking Bitcoin back to $60,000 per coin.
While there might be hyperBitcoin fans putting their entire wealth into Bitcoin, that's the exception rather than the rule. As a general guideline, you should probably have less than 5% of your portfolio dedicated to Bitcoin. Many cautious financial advisors even recommend keeping only 1% of your wealth in Bitcoin.
How much Bitcoin is too much Bitcoin?
So, if you're considering investing in Bitcoin, you'll need to figure out just how much Bitcoin is "too much" Bitcoin. You've got to find the right balance between upside potential and portfolio diversification. And keep this in mind: Bitcoin's long-term growth trajectory might be upwards, but it's likely to be bumpy along the way.
Given MicroStrategy's aggressive Bitcoin investing strategy, with a goal to invest $42 billion over the next three years, it's clear that for some, the notion of 'too much Bitcoin' might be shifting. Saylor, for instance, is fully committed, describing Bitcoin as his top-tier investment class, sinking his money into it both personally and for MicroStrategy. However, financial advisors generally recommend keeping Bitcoin allocation below 5% of your portfolio to manage diversification risks, given Bitcoin's volatility.