The new Warren Buffett of crypto?

Photo by Jievani Weerasinghe on Unsplash

“Bitcoin is not a speculation, or even an investment. It is a life strategy”.

-Michael Saylor

On March 12, 2020, Michael Saylor is facing an impossible dilemma.

On the one hand, he knows that he will lose 25% of the capital of his MicroStrategy company due to the devaluation of the dollar and inflation if he does nothing.

On the other, he looks at this investment that he does not know and which seems to him completely crazy and risky :

Bitcoin!!!

He has already lost $900,000 in a week due to the decline of the peso in his Argentine subsidiary. And this time, if he doesn’t do anything ,

That’s $125,000,000 that’s going up in smoke.

“But… Bitcoin? Isn’t that the stuff that’s used to buy drugs and guns on Silk Road?” Saylor wonders.

He has been following the subject from afar for a few years now, and his opinion is very strong.

Already in 2013 he affirmed: “The days of Bitcoin are numbered. It’s only a matter of time before it suffers the same fate as online betting”.

But as he looks at the numbers he begins to doubt.🤔

In 2013, one BTC was worth $687… and in 2020 it is worth $ 20,000, that is +2811%! 🤯

“Damn, What kind of investment does these performances make?!”Cries Saylor.

Desperate to find a solution to his problem, he frantically consumes everything he finds on Bitcoin. He reads hundreds of articles and listens to dozens of podcasts on the subject until one day, August morning,

“WHAT A FOOL! BITCOIN IS THE FUTURE!!!”Saylor screams as the pieces come together in his head.

The next day, he invests $250,000,000 of his company in BTC.

A month later, when the decline of Bitcoin has just cost him $ 40,000,000 on his first investment… He invests another $175,000,000.

Three months later? He invests another $650,000,000.

His colleagues, his investor friends and his relatives call him crazy.

But no matter, he continues to invest every available penny, shouting from every roof top every time :

“AAAAAHHHH I’M STILL UNDEREXPOSED!!”

And his bet has largely paid off. Because today it totals almost 175,000 BTC for a value of more than $ 7.3 billion.

But the real reason for his success does not come from his flash of genius for Bitcoin or Bitcoin in itself. But due to the fact that he considers it exactly as Warren Buffett considers his investments :

Where everyone sees BTC and crypto as a “get rich quick scheme” and focuses exclusively on trading, He only sees the long term.

He even goes so far as to copy Warren Buffett’s quote by saying: “If you are not ready to own Bitcoin for 10 years, don’t even think about owning it for 10 minutes”.

(Replace Bitcoin with action and you have Buffett’s phrase 😅).

And while 72% of crypto traders lose money (according to the thousands of daily transactions of the 33 million users of eToro)…

He benefits from the power of BTC which has been crushing all benchmark indices since 2017 :

(Without doing anything).

Even when BTC fell back below $ 20,000 and everyone came waving his mistake under his nose, he maintained his positions.

Exactly like Buffett did when everyone called him crazy for investing 40% of his portfolio in Bank of America. Or when the press and his shareholders fell on him when he refused to sell to follow the tech gold rush in 1999.

(Which allowed him to avoid the terrible crisis in 2000!)

And yet, the comparison ends there.

Because Buffett would rather have his arm cut off than invest in Bitcoin 😂.

But why, in fact?

Because he has too little anteriority?

This is true compared to the S&P 500, but it has now been actively traded on the markets since 2013.

Because it is not recognized by traditional finance as a real asset?

So why is it traded in the form of ETPs and now ETFs by behemoths like Blackrock, VanEck, Fidelity, and Grayscale and recognized by the SEC? With companies like Vanguard investing millions in mining companies…

Because it is an unstable and volatile asset?

Yes but exactly like the S&P 500 which has years at +45% and others at -38%. Which is not really a long quiet river :

Because its performance is lower than that of other assets?

For the past 7 years, Bitcoin has crushed all other stock indices, including those that I haven’t shown you like the NASDAQ or the DOW…

Because it is purely speculative and it is based only on wind, without physical reality like a company or gold?

It is true that it is not based on anything tangible. But it has a multitude of features that make it useful and disqualify it as a “purely” speculative asset :

It allows a large volume of capital transfer at a low price, without intermediaries, with security anywhere in the world ;
It is not dependent on a state and obeys its own rules. Which makes it invulnerable to the whims of monetary policies. Its network is also much more resistant to attacks than that of a bank, since the nodes are all over the world and not just in a few servers ;
This is an excellent bulwark against inflation. Not only because it is deflationary in itself (there will only be 21,000 million Bitcoin in circulation, not one more) and because its performance largely beats the decline in purchasing power ;
The rarity of Bitcoin (in particular due to halving and its finite number, unlike the states that can turn the money board) naturally makes it more valuable ;
Even if some platforms make headlines about crypto hacks, Bitcoin network is very strong. It would take 51% of the total mining power to destabilize the network, which is almost impossible. And you can secure your capital on cold wallets making it untouchable ;
It is flexible (each Bitcoin can be divided into 100,000,000 satoshis to pay what you want) but also indestructible and easily storable (unlike gold under your bed!).

So before throwing it to the nettles like some, do your own research before having an opinion on the subject.

(Even Michael Saylor who hated him in 2013, changed his mind and became a fan after inquiring!)

Especially after the historic adoption of Bitcoin Spot ETFs and just 89 days from the halving.

So I’m not telling you to throw yourself on Bitcoin…

Just to beware of all the beliefs and preconceptions that you might have about important topics. (Sometimes your future depends on it)

Because if you dig often, they’re not yours. But rather those of people who, in the end, don’t know more than you 🤷.

So keep an open mind when a new opportunity comes your way.

And most importantly, don’t ignore all the positive signals just because someone else thinks differently. Especially now, when everything is changing at an incredible speed and curiosity and adaptation have never been more valuable.

Good luck with your investments!

Thanks for reading

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