Michael Saylor Reacts To Bitcoin Crash And Inflation
But ultimately, if youre, an investor and youre concerned about preserving your wealth to give to your children or your grandchildren, then uh whenever youre in an inflationary environment, your your strategy is simple. I have to convert my weak currency into a strong currency, ideally convert my weak property into strong property, and i think one of the obvious things is digital property right. If i created a city in cyberspace with 21 million blocks – and nobody could make any more and it was going to last for a thousand years – and it was the dominant city and everyone wanted to live there, would you want to own one of those blocks? I think the answer is yeah and that city is called bitcoin, as the crypto markets continue to fall. Recently, bitcoin fell to its lowest level in 2022, down more than 50 percent. From its all time price high, the cryptocurrency crashed below 31 000 on monday. For the first time since july 2021, according to coin market caps, price index marking the latest in a severe capitulation from its price peak in november, the price drop comes amid a broader crypto market collapse, which has seen nearly 300 billion dollars wiped from the value of Cryptocurrencies over the last four days, ethereum mirrored bitcoins demise, matching its 13 price fall since last week, while some other leading cryptocurrencies fared even worse. Solana fell by more than 16 percent over the last week, while terra luna dropped by more than 52 percent.
One measure of market sentiment suggests bitcoin traders and investors are experiencing extreme fear as a result of the tumbling prices. The crypto fear and greed index, which analyzes exchange data and online trends to assess overall market sentiment, is currently at 11 marking its lowest point since last year. Crypto markets are cyclical, but there are a couple of other factors driving the sell off at the moment. The federal reserve raised interest rates, half a percentage point last week, and wall street responded with a stock slump. Crypto markets have followed suit, shedding nearly 300 billion billion over the past week, michael saylor, the ceo of microstrategy, whose firm holds the most number of bitcoin at 129 218 bitcoins on its balance sheet at the end of march. No other publicly traded, u.s operating company holds as much bitcoin. Microstrategy stock is down 58 percent this year against a 30 slide in bitcoin. Michael saylor, in a new interview has reacted to the current market volatility and inflation. He shares his views with the money gps youtube channel. I think that if youre a short term macro trader like youre thinking in terms of hours or days or even weeks, youre really concerned about that question. But i think that if you have a time frame of four to ten years, i think theres a different question, which is: why are the interest rates going up uh and what is the macroeconomic environment? And i would say i would say you probably shouldnt even buy bitcoin if youre uh, if your time horizon is less than four years, because youre a trader and if youre a trader youre, probably not going to care about anything.
I have to say youre. Just looking at on whether its correlated or uncorrelated and and throwing lots of money around without thinking about it, i think, if youre, really a deep thinker or a macroeconomic investor, the bigger issue is, we have monetary inflation, the money supply or the currency supply is expanding. I think the news today in turkey was 70 percent inflation in turkish lira. We probably got something in the range of 15 to 20 percent currency inflation in the u.s dollar in the euro. Weve got 40 inflation in like an argentine peso or more so what you have is an inflationary environment. We know the cpi, which is which is a which is a uh uh, manipulated measure of inflation, its actually the lowest inflation that one could reasonably measure. I think uh its like seven and a half percent six and a half seven eight percent in the u.s and europe – and these are 40 year highs. So the cpi is eight percent, but that but the actual asset inflation rate is double to triple that. So the reason that interest rates are going up is because theres pressure on the central banks to get inflation under control and and their one tool to do it is to raise interest rates. But theyre not going to stop the inflation, because the inflation is caused by excessive money, printing budget deficits and the wars and political policies, domestic and foreign policies. And these policies continue.
So, given the fact that we have uh an expansive currency environment and what you can see is the price of of food and energy and scarce resources keeps going up. The question really is: if i have some money, what should i invest in and the answer is you dont want a whole currency because the currency is collapsing in value. You know the the us dollars lost 99.7 percent of its value. Over 90 years i mean and thats the winner. The losers are are losing 99.9 of their value over 100 years, so the currencies are all collapsing. So i i dont want to hold the currency. I dont want to hold bonds because bonds are currency derivatives. You know you know im going to basically youre going to give me a million dollars and im going to give you interest on the million dollars at three percent for 30 years and ill give you the million dollars back and in 30 years the dollars will buy. 10 percent of what they buy right now so thats even worse. You dont want to hold a value stock that generates valued on cash flows, because if the stock is valued on cash flows without growth, it looks just like a bond right. It might be slightly better than a bond, but if you, if the currency is losing 10 of its value a year and you cant raise your cash flows or raise your prices, you have to increase your cash flows.
Ten percent a year to offset a ten percent currency collapse right. So when the currency is collapsing at seventy percent a year like turkey, the company you own has to raise its prices in turkish lira 70 or sorry. You have to you have to raise your your prices by an amount such that your cash flows would increase by 70 percent so that you hold parity in value. So equities are currency derivatives, partial currency derivatives, bonds are almost complete currency derivatives. Commercial real estate is a partial currency derivative. The currency is currency, derivative right, its a full currency derivative. So what do i own and the answer is i want to own scarce property, scarce desirable property? What is it that you own, that an affluent intelligent person will want to buy from you in a decade thats the question you have to ask yourself so, if youre owning things that will last a decade right, i mean, if you buy a car thats not going To last a decade, its not really an asset, its depreciating but maybe youre on a sports team or a picasso painting, i dont, know well well. People want to buy gold from you in a decade. Will they want to own own uh? The building that you own in a decade right: well, they want to own the intellectual property rights. Well, it all depends. Uh bitcoin is scarce, desirable asset because it represents digital property and that strong property.
I want to move out of the country. I want to move it out of the jurisdiction of a politician that may confiscate it or tax it away, right and thats, why you know converting a million pesos, a million dollars of pesos into a million dollars of dollars and bonus errors wont help you, because eventually, The politicians will freeze your bank accounts, convert it back into pesos and devalue it twenty to one that wont, help right, converting a million dollars of pesos in the million dollars of dollars and then buying a million dollars worth of big tech. Stocks in the us may be a better idea if the big tech stocks are monopolies, theyll be able to raise their prices, hold their cash flows in whole value. Monopolies will be fine right. What is a monopoly, its scarce desirable property? If i offered you a monopoly with unfettered ability to change the price of something like oxygen, sell oxygen to new york city, you know youre, probably going to do okay. The problem with with even monopolies, though, is over time. Monopolies get regulated right like like in theory, the richest person ought to be the person that sells water in new york city, but theyre, not the richest person, because the new yorkers get together and they decide that they dont want the water company to raise the price Of water to a hundred dollars a gallon, even though youd pay it if youre thirsty what? What can i buy? Thats gon na hold its value over time, that represents scarce desirable property, not just scarce, because theres, a lot of things that are scarce, that arent desirable right, scarce, desirable property.
I think one of the obvious things is digital property right. If i created a city in cyberspace with 21 million blocks – and nobody could make any more and it was going to last for a thousand years – and it was the dominant city and everyone wanted to live there, would you want to own one of those blocks? I think the answer is yeah and that city is called bitcoin. The crypto market is not the only assets crashing. The nasdaq also continue to lead the losses, as investors moved away from high flying tech stocks shedding 3.3 percent in the morning trading on monday. According to the washington post april was the worst month for the index since 2008, as jitters sent investors running for cover the trend carried over into may amazon, apple, meta and lyft all slid two percent microsoft declined three percent and tesla was down five percent edward moya. The senior market analyst at onda noted that crypto markets have been highly correlated to indexes, such as the nasdaq. He observed that the tech focused index is down 21 this year, while bitcoin is down 22 moya added that confidence is low and the asset has been mainly consolidating for most of this year. Bitcoin is really stuck in a sideways news cycle where youre just waiting for it to be calm on wall street and then youll see more people confident in investing. I still think theres a lot of long term potential value here, but you have to be able to stomach this volatility here at savvy finance.
We have been buying the dip with every cent we can spare. We encourage our viewers to not get discouraged about the current market situation. Most importantly, never sell your crypto at a loss. It may take some time, but the market will surely bounce back stronger hurdle hard and stay savvy.