Bitcoin, once a trillion dollar asset, has been falling since the beginning of the year and its price even dipped below $20,000 in June. And the brutal realities of the crypto market have finally caught up with Microstrategy’s founder and well-known Bitcoin bull, Michael Saylor.
Microstrategy said Tuesday that Saylor, one of the crypto billionaires who enjoyed somewhat of demigod status in the crypto investing community, will step down as CEO and become executive chairman. Phong Le, the current President of MicroStrategy, will replace Saylor as the new CEO.
While MicroStrategy sells analytics and intelligence software, Saylor made the decision to buy Bitcoin and keep it in the company’s treasury in 2020. That one decision had cost the company more than $1 billion, resulting in Saylor being “thrown upstairs.”
Under Saylor, Microstrategy had been amassing BTC with a laser focus – almost regardless of market direction. It now holds around 129,699 BTC at an average price of $30,650 per BTC, according to BuyBitcoinWorldWide. In other words, Microstrategy has invested a whopping $3.98 billion in the world’s largest cryptocurrency.
For comparison, the company’s market cap was $3.68 billion based on Wednesday’s close on the Nasdaq.
The first BTC purchase occurred about two years ago, on August 11, 2020, when MicroStrategy bought 21,454 bitcoins for $250 million. Over the course of 2020, 70,470 BTC were accumulated at a cost of $1.125 billion amid the global pandemic.
The first purchase of 2021 was made on January 22, when the price of Bitcoin was around $33,000. While MicroStrategy continued to buy Bitcoin over the past year, the largest purchase on Feb. 24 was 19,452 BTC for $1.026 billion.
Saylor was gradually becoming extremely bullish on Bitcoin and bought the coin for $59,339 in May of this year.
MicroStrategy bought 7,002 BTC on November 28, 2021 when Bitcoin was above $57,000. All bets were on when wholly-owned MacroStrategy entity borrowed $205 million from Silvergate Bank to buy the leading cryptocurrency.
Saylor tweeted that the loan required $410 million in collateral and that the company had enough BTC to meet the requirements. He said if Bitcoin drops below $3,562, MicroStrategy will offer some other collateral but still won’t sell its BTC holding.
But in the second quarter of 2022, MicroStrategy posted a loss of $918.1 million, of which 99%, or $917.8 million, was attributable to the huge hole created in its balance sheet by Bitcoin’s recent crash.
It was time for Saylor to go.
In hindsight, Saylor’s downfall was not unexpected. Regulators around the world have long warned that extreme volatility in crypto prices has made them high-risk assets, despite regular attempts by crypto billionaires to bid prices higher. Microstrategy’s problems show that even large companies with star CEOs are not immune to the punishment of such volatility.
Saylor posted a video of his interview with Fox Business’ Charles Payne on Twitter on Thursday, in which he doubled down on his bullish view of Bitcoin.
In the video, Saylor said that shares of Mircrostrategy are up 123% and Bitcoin is up 94% since the software company decided to add BTC to its treasury, noting that “we’ve outperformed every major asset class, every major tech stock, all companies are software stocks.”
The billionaire also pointed out that MicroStrategy’s enterprise value has grown from $666 million in 2020 to “$5.5 billion or more,” representing 730% enterprise value growth. He said, “No strategy other than the Bitcoin strategy could have done that.”
Saylor said he will remain the major and controlling shareholder of MicroStrategy, adding that “it’s my idea and I want to do this.”
Microstrategy said Saylor, as head of the board’s investment committee, will “oversee the company’s bitcoin acquisition strategy.” The billionaire confirmed on Twitter that he would “focus more on bitcoin.”
Twitter draws parallels with Jack Dorsey
The Twitter community was quick to respond to Saylor’s departure as CEO of Microstrategy and his new role.
It highlighted two CNBC articles, one about former Twitter CEO Jack Dorsey’s exit from the social networking company and the other about Saylor’s transition to a new role at MicroStrategy.
Like Saylor, Dorsey is a well-known Bitcoin maximalist.
The striking similarity between the two billionaires’ career moves may sound amazing, but both seemed to have gone overboard with the idea of launching Bitcoin.
One member of the crypto community even called Saylor a “delusional optimist with a literal Hold On for Dear Life mindset.”
Peter Schiff, chief economist and global strategist at Europac.com and one of the biggest critics of Saylor’s adoption of bitcoin, commented sarcastically, “Listening to Saylor’s claim that a $1 billion loss in bitcoin is a home game for shareholders is like hearing about it.” Listening to Democrat claims that two straight quarters of declining GDP is not a #recession but a strong economy that keeps growing.”
The Wall Street Journal tweeted a link to his article on Saylor, noting, “If you ask Michael Saylor why he bet MicroStrategy’s future on Bitcoin, he will tell you he had no choice. The decision backfired, bad. On Tuesday, the tech company announced that it would step down as CEO amid mounting Bitcoin-related losses.
The WSJ found that MicroStrategy was a poorly performing stock that couldn’t compete with other tech giants. However, the decision to hold Bitcoin had compounded the stock’s woes. The stock is down 43.81% so far this year.
Crypto stocks like Coinbase move in tandem with Bitcoin’s price. This correlation is Microstrategy stock’s Achilles heel, according to analysts. “MicroStrategy is not an ideal investment for most traders,” Edward Moya, an analyst at Oanda, told WSJ.
BTC sends positive signals
After starting 2021 at $29,374, BTC surged to $63,500 and then fell to $29,800 in July. It then hit an all-time high of $68,800 in November, triggering a market frenzy. BTC’s current price is 66% below this all-time high. The crypto was trading at $23,078 as of 2:55 a.m. ET Thursday, according to data from Coinmarketcap, down more than 65% from its all-time high.
on chain Data from Glassnode indicates that the amount of Bitcoin “HODLed or Lost Coins just hit a 20-month high of 7,399,153.535 BTC.”
On-chain data is sending positive signals amid the general gloom as the “Lossing Address Count (7-day moving average) just hit a 1-month low of 16,569,638,512,” while the “Lossing Address Count (7-day moving average).” Addresses in profit just hit a 1-month high of 26,062,502.655,” according to Glassnode.
The “number of addresses with 1+ bitcoin hit an all-time high of 891,971,” surpassing the previous high of 891,970 observed on Aug. 2.
35 years after graduating with honors, Michael Saylor returns to his alma mater to lead the MIT Bitcoin Expo
Photo: YouTube Screenshot/MicroStrategy Official YouTube Channel
https://www.ibtimes.com.au/bitcoin-bull-michael-saylor-burned-cryptos-volatility-undeterred-1837476?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Bitcoin bull Michael Saylor burned by crypto’s volatility but undeterred