Bitcoin will "swallow" gold

Bitcoin Eats Up Gold

On March 12, MicroStrategy Executive Chairman Michael Saylor said on CNBC on Monday that his company announced the purchase of another 12,000 Bitcoin (BTC) and that cryptocurrencies will become a more valuable asset than gold in the future.

Saylor said that Bitcoin is definitely at least digital gold, and it will eat up gold. It has all the advantages of gold, but none of its defects.

He also expects Bitcoin to attract money away from other risk assets , including the large SPDR S&P 500 ETF, and that Bitcoin will begin to appear in other funds, similar to BlackRock's plans for a spot Bitcoin ETF in its Global Allocation Fund.

Saylor reminded that the upcoming Bitcoin halving in April will reduce the cryptocurrency’s block reward by 50%, meaning only 450 new Bitcoins will enter the market every day, compared to the current 900. “In order to meet investor demand, the price of Bitcoin will have to adjust.”

Previously, on November 11, 2023, Michael Saylor believed that by the end of 2024, the demand for BTC could increase 10 times. "I think the next 12 months will be an important period. Because demand (monthly) should double or triple, or it may increase 10 times, ranging from 2 to 10 times. But the supply available for sale in April will be reduced by half. Therefore, the Bitcoin available to miners per month is no longer $1 billion, but $500 million."

MicroStrategy makes a killing

On March 11, MicroStrategy acquired 12,000 bitcoins for $821.7 million in cash.

SEC filings show that between February 26, 2024 and March 10, 2024, MicroStrategy used $781.1 million in offering proceeds and $40.6 million in excess cash to acquire approximately 12,000 bitcoins for approximately $821.7 million in cash.

The average price per bitcoin was approximately $68,477, including fees and expenses. As of March 10, 2024, MicroStrategy and its subsidiaries held a total of approximately 205,000 bitcoins, which had a total purchase price of approximately $6.91 billion and an average purchase price of approximately $33,706 per bitcoin, including fees and expenses.

Market data shows that since MicroStrategy began buying Bitcoin, the company's stock price has soared more than 1,000% , and its market value has increased to about US$25.7 billion.

On the same day, MicroStrategy completed an issuance of $800 million 0.625% convertible senior notes with a maturity date of 2030.

The company used the net proceeds from the offering to purchase additional bitcoin. The bonds were sold on March 8, 2024, and included an additional $100 million in bonds issued pursuant to the purchase option exercised in full by the first purchasers. The bonds will pay interest on March 15 and September 15 of each year until September 2024.

As early as February 29, Michael Saylor's personal wealth increased by about $700 million after his company's stock and Bitcoin prices rose for three consecutive days. MicroStrategy's stock price rose 10% on Wednesday, and the three-day increase reached 40%. Most of the company's value comes from its Bitcoin holdings. Saylor is MicroStrategy's largest investor, holding a 12% stake in the company.

Bitcoin has surpassed silver

On March 11, according to CMC data, the market value of Bitcoin has risen to 1.398 trillion US dollars, surpassing silver (1.379 trillion US dollars) and becoming the eighth largest asset in the world by market value.

A few days ago, Grayscale released a report, which also believed that Bitcoin is a macro asset that can compete with the US dollar and physical gold (two traditional "store of value" assets).

Grayscale said that for some investors, Bitcoin may have advantages over physical gold. For example, it is easy to carry: as long as the holder has access to the Internet and holds the private key, Bitcoin can be used anywhere in the world. In Grayscale's view, the rise in demand for Bitcoin mainly comes from investors' concerns about the medium-term outlook of the US dollar and seeking an alternative "value storage" asset. It is worth noting that the price of physical gold also hit a new high on Tuesday in US dollar terms.

Additionally, it’s worth noting that since the launch of the spot Bitcoin ETF, U.S.-listed gold ETFs have seen net outflows, perhaps indicating a shift in investors from one “store of value” asset to another.

Final Thoughts

In a recent interview, MicroStrategy’s Michael Saylor announced a massive investment in Bitcoin and predicted that the digital currency will surpass gold as a more valuable asset.

Saylor highlighted the advantages of Bitcoin, predicting that it will attract funds from traditional risk assets. He also pointed out the upcoming Bitcoin halving event and the potential for a significant increase in demand for Bitcoin.

MicroStrategy's Bitcoin investment has significantly increased its market value, while also increasing Saylor's personal wealth.

Bitcoin's market value has surpassed silver to become the eighth largest asset in the world and is seen as a promising macro asset.

Looking ahead, Bitcoin is likely to continue to strengthen its market position as a “store of value” asset despite the challenges it faces from regulation and market volatility.