Exactly - Bitcoin is not a safe place to store cash as others in this thread are arguing. It's certainly not anywhere close to as safe as the US Dollar. It's well within possibility that Bitcoin will drop 80% over the next 6 months.
It's well within possibility that Bitcoin will drop 80% over the next 6 months.
Interest rates are close to zero; including inflation, if Saylor kept the company's treasury in cash (and cash equivalents), he's be losing money.
1. Not when corporations and billionaires are investing in it and are planning to hold it for a long time.
2. The dollar has lost 80% of its value in the last 80-90 years. And with no end in sight of the Fed printing trillions of dollars, the dollar is being debased as we speak.
3. The dollar may not be the global reserve currency for much longer; the US is only about 20% of global GDP [1].
I feel like I had these same discussions in 2017 when Bitcoin enthusiasts were saying it could only keep going up. New justifications for it to keep rising don’t outweigh the reality that no one knows what the future price will be.
And regarding Saylor, you say that holding it in cash is literally losing money - if Bitcoin drops 80% again, he’ll be losing a LOT more than the 1% he’d lose if he had cash.
I feel like I had these same discussions in 2017 when Bitcoin enthusiasts were saying it could only keep going up.
That was before institutional money and billionaires took it seriously. That was also before a global pandemic that has required virtually all central banks to inject trillions of dollars into the global economy to keep it afloat, inflating fiat currencies.
Saylor knows exactly what he's doing—a speculative attack [1]—when someone uses a shitty currency to acquire a much better currency or asset.
You also completely ignore that Bitcoin might be overtaken by another competitor in this area. Altavista and Myspace didn't win either.
Think about it… it's highly unlikely that something else could achieve the network effects, mindshare, hashing power and all of the rest of bitcoin's attributes right now. In the early days, when bitcoin barely had any value at all, it would have been possible. But having gone from $0 to $350+ billion in market cap, it's too late.
Quoting Travis Kling (@Travis_Kling):
"Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally."
The British pound sterling, the French franc, the Dutch guilder, they all were reserve currencies but they got overtaken.
Usually not because their inherent values changed but because the environment changed and another, more suitable currency emerged. That's exactly the narrative that people push about Bitcoin's advantages over the US dollar.
But because things happen a lot faster in crypto than they do in traditional finance, I wouldn't bet on "Bitcoin can't ever be overtaken".
This is the problem with the Bitcoin enthusiasts - they think they can predict the future price with near certainty. You don’t think that rosy picture of BTC is held by thousands of others and already baked into the share price? “Highly unlikely” only describes Bitcoin’s potential as a store of value.
If your investing horizon is any amount of time, Bitcoin is not for you. Bitcoin is not an investment, it’s a pure speculation. As another comment perfectly summed it up, lottery tickets are not an investment.
A change in stock to flow is not "priced in". And gold is also a speculation, it still works/worked. Social value networks are quite sticky and tend to get stronger over time.
Its also been around for 3000 years and is far past its price discovery phase. Aside from that you dont hold gold in perpetuity, its for certain several year stretches and certain decades. I hold none just because I think btc challenges it (which is also the view of JP Morgan's latest opinion so in decent company).
Second comment here: Long cyclical runs can be timed. For instance golds decade long rip prior to the decline was due to etf introductions.
And no I dont think you do “got it”. You dont hold anything in existence forever. If youre not comfortable making shifts every few years (or whatever) and having to actually do some thinking from time to time then investing isnt for you.
I actually disagree with you. With bonds you are virtually guaranteed to lose value over time as real yields are negative (against inflation). Thats a risk. Getting poor slowly and not keeping up with other rising assets is a threat to wealth even when you might feel safe from low vol. With bitcoin the long term moving average is up despite short term volatility and network effects are quite difficult to overcome. Bitcoin is a good holding if you plan to lock it up for 10 years vs bonds.
It was crazy to think this 5 years ago, now its less crazy, and tomorrow it will be normal. That my thesis and its also why billionaires are pouring in right now. If you asked me to hold a bitcoin vs a bond equivalent for long term the decision is easy for me especially knowing that global debt monetization is essentially a necessity at this point.
