A prominent investment expert has raised concerns about MicroStrategy's aggressive Bitcoin accumulation strategy, even as the company's holdings reach $40.01 billion.
The warning comes as the company's portfolio shows unrealized gains of 70.35% ($16.52 billion) on its total investment.
Gavin Baker, managing partner and chief investment officer of Atreides Management LP, identified potential risks in Bitcoin with MicroStrategy debt (BTC) construction strategy during a All-In Podcast appearance recently.
The company, under the leadership of Michael Saylor, has collected 402,100 BTC. Baker specifically warned about the growing discrepancy between MicroStrategy's $400 million annual revenue and the growing interest costs from Bitcoin-backed debt.
“Trees don't grow to the sky,” Baker said. He suggested that the strategy of issuing debt to buy Bitcoin could become unsustainable if debt investors lose confidence in the approach.
Baker's concerns center on the potential disruption of what he describes as a “magical money-making machine.” If Saylor's strategy becomes too large relative to MicroStrategy's core business capabilities, over-alignment could lead to significant risks to the company's financial stability.
Saylor is still collecting Bitcoin
Despite these warnings, Saylor maintains his commitment to the Bitcoin collection. In a recent interview with Yahoo Finance, he reiterated his consistent four-year message: “Every day for the last four years, I've said buy bitcoin, don't sell the Bitcoin. I'm going to buy more Bitcoin. I'm going to buy Bitcoin at the top forever.”
Saylor advocates a long-term investment approach. He advised investors to consider Bitcoin as a capital asset with a holding period of at least four years, and preferably ten years. He also talked about the importance of dollar cost averaging and maintaining perspective during short-term market volatility.
MicroStrategy's chairman defended his strategy by highlighting the company's success in generating shareholder value through BTC holdings. “MicroStrategy makes a lot of money by holding that digital property. We generate a lot of shareholder value from that. “
The different perspectives on the MicroStrategy strategy are emerging as BTC achieves new milestones, breaking through $100,000 to reach $103,900.
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