Michael Saylor has spilled a lot of ink lately and the phenomenon is not likely to stop. Indeed, the entrepreneur now advises companies to create a cash flow in Bitcoin. This advice could have many consequences.
Cash in Bitcoin; yes but not for all companies
Michael Saylor is talked about a lot. After leaving his position as CEO of MicroStrategy, the entrepreneur announced that he wanted to devote himself entirely to Bitcoin. In effect, he will still be part of the company’s board of directors and will take care of the more executive part of the company.
In order to explain his choices, Saylor did not hesitate to give numerous interviews. He also spoke to CNBC to break the silence about his decision. Between two questions, the former CEO even advised companies wanting to expand their cash flow to build up a Bitcoin reserve.
Unfortunately, despite the entrepreneur’s enthusiasm, this advice is not to be taken lightly. Firstly because of the risks involved in investing in Bitcoin.
The small orange piece is solid, but it remains subject to a very strong need. The latter has recently been accompanied by a strong correlation with traditional markets. In other words, a company building up a reserve of BTC as cash could see it dwindle overnight. It would take a new economic crisis or an incident in the crypto sector to lose everything.
The easiest way for a company interested in cryptocurrencies is to build up a Bitcoin reserve that remains a minority of the proportion of traditional cash. Also, contrary to what Michael Saylor seems to imply, BTC is not suitable for all societies. Its investment requires education and a solid strategy. Companies should also choose their favorite cryptocurrency according to their needs and, perhaps, put on several different currencies to protect themselves from a possible drop in prices.
The former CEO would not be an example for the crypto sphere
If the entrepreneur is the unconditional advocate of the BTC and suggests that the latter is an accessible asset, we must not forget that it has caused significant losses for MicroStrategy. According to Fortune, the company lost $2 million because of its CEO’s miscalculations. It even seems that it was this incident that pushed Michael Saylor towards the exit, although similar proposals have been heavily modified by the crypto community on Twitter.
According to Mr. Saylor, that said, this bad patch remained anecdotal. And the former CEO goes even further: for him, investing in Bitcoin would be almost risk-free. Back in April, he said the digital asset was safer than traditional bonds. Proposals that could, however, deceive companies that are too greedy or profane.
Finally, it is clear that the advice given by the entrepreneur can have disastrous consequences for the entire crypto sector. Corporate block investment could drive Bitcoin’s price up at lightning speed. If so, both Michael Saylor and MicroStrategy could get rich. However, the phenomenon may not last.
BTC would encounter another period of stagnation once all businesses are equipped, although constant buying and selling is more likely. We can then see the explosion of a new bubble. The aggrieved companies would run out of cash and resell their coins in a panic. A crypto winter worse than the last would then befall the sector and its origin would be found in the somewhat overly enthusiastic words of one and only one man.
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