MicroStrategy CEO Michael Saylor and Jack Dorsey: Global Bitcoin Outlook

Michael Saylor has bought even more bitcoin and he's telling other major corporations to follow suit. I'm Natalie Burnell for Bitcoin Magazine, and at this point it would be breaking news if we heard Saylor stopped buying bitcoin. Right here's his latest purchase tweet: MicroStrategy has purchased an additional 660 bitcoins for $25 million in cash at an average price of $37,865 per bitcoin. As of 1/31/22, we hold 125,051 bitcoins acquired for $3.78 billion at an average price of $30,200 per bitcoin. Now this news comes as Michael and his company kicked off MicroStrategy World 2022, where they're updating investors on their Q4 performance and talking about bitcoin for corporations this week. And Michael sat down to interview two of bitcoin's biggest thought leaders, two of my favorites: Lyn Alden and Jack Dorsey. So let's begin with Block CEO Jack, who chatted with Michael for about an hour about bitcoin strategy and where he sees the future of bitcoin allocation for corporations. Now here are some clips from that discussion, starting first with Jack talking about bitcoin's transparency, resiliency, and security as a network.

Of course we know and have been following Jack and his company spearheading efforts to supercharge and expand the Lightning Network and support core developers in the space. Here's Jack talking about the evolution of bitcoin's network use cases.

Here's a final great clip, here's Jack's take on why bitcoin is built to last.

After his discussion with Jack, Michael also spoke with one of my personal favorite voices in the space, the incomparable and ever brilliant Lyn Alden. Their chat was both a global macro review and an economic outlook for the future. Here's Lyn talking about bitcoin's distribution and the behavior of long-term holders.

What I have here is the one-plus year HODL wave. We could also call it the bitcoin distribution cycle. What we see here: the blue line is bitcoin price, and the orange line is the percent of coins that have not moved on-chain in more than a year. Of course bitcoin can be held multiple ways—some people hold it on-chain, some people hold on exchanges, some people hold securities tied to bitcoin in different ways. This is looking at a very large snapshot of on-chain, which is a very big part of the market still. What you generally see is that during these major bull runs, all this new capital comes into the space, and some of those longer-term holders start to sell into that strength. Basically, they experience 5x, 10x, 20x gains in some cases—they have life-changing amounts of capital appreciation. They want to rebalance, they want to consume, so they distribute into some of that strength, and a lot of that new capital pours in. Then you generally see during these consolidation type of markets, these bear markets, you generally see the reverse. You have the longer-term, more knowledgeable, higher conviction holders become a larger and larger share of the market over time. What we see now is that we're back in this distribution cycle. During the early bullish period of 2021 and the whole phase there, those longer-duration holders were willing to sell into that new strength, but throughout this consolidation that we've been in for the better part of a year, those longer-term hands have not been willing to sell at these prices. Many of them are still accumulating at these prices, dollar-cost averaging. Coins are continuing to go from those faster money hands or those weaker hands into those longer-duration, stronger, less liquid hands. That generally sets up the next cycle. You have the macro events. You can separate it into demand and supply. On demand, you have what we covered before: risk-on or risk-off periods, how much liquidity is in the macro environment—those types of factors can determine how much capital comes into the space or leaves the space. Meanwhile, the other side is the supply side: how much of the existing coin base is available for liquid purchase versus how much is locked up into very strong or illiquid hands. What's made this cycle rather unique is that in prior periods when you had these peaks in demand, that was the top of the cycle. Whereas in this time, so far, we had a slight new high later in 2021, not because demand was as high as early 2021, but because you had moderate demand and really, really tight supply. So there are really two sides of the market to keep monitoring. Different analysts focus too much on just the demand side or just the supply side; we put both together. Basically, what we're seeing right now is we're in a weak period for bitcoin demand, as you would expect from economic deceleration and liquidity being pulled from the market, while the supply side is one of the most bullish setups we've seen now.

Other than these strong underlying fundamentals, Michael and Lyn also discussed the positive developments surrounding bitcoin's adoption and acceptance from a political and regulatory point of view. While other countries like China turn away from bitcoin and its economic opportunities in favor of social and capital controls, in the U.S. we're seeing bitcoin understood as digital property, and there's a move toward incorporating it in the financial system through the channels currently available, with everyone of course awaiting that spot ETF that could open up more lanes of highway for institutions and pension funds. But the big point is the U.S. is poised for a major advantage if it gets this right.

Yeah, I think game theory suggests that countries that don't need capital controls or have looser capital controls are in a much stronger position to embrace bitcoin, and then say check to China. It's their problem if they're unable or unwilling to open up certain things to the rest of the world. So the growth of bitcoin and the growth of a stablecoin dollar, both of those are going to create more pressure, more financial pressure on China, and isolate them in a way. It's like isolating yourself from the internet, except it might be worse because the network effect of trillions of dollars of U.S. dollars and trillions of dollars worth of property on the bitcoin network is going to be a pretty powerful network to fight against. You know, I don't know, I think it's more powerful than simply doing your own Google Maps. I mean, they blocked Twitter and they block Google and they block Facebook, and they created their own stack. But this is something which is potentially 10 to 100 times more valuable to block. It could be 10 to 100 times more painful.

Finally, this was an interesting clip about bitcoin not being red or blue, it is apolitical.

Well, I mean, I think the good news is that there's no unanimous view, right? So you have bipartisan support across the board, in some cases even though you have different percentages. There are conservative politicians that embrace bitcoin, there are progressive politicians that embrace bitcoin. Early on in its history, libertarians were quick to identify bitcoin as something useful for their ends. But of course, as it became a larger and more mainstream asset class, it got enough to catch the attention of other types of politicians in the United States. I think so far we're seeing more interest on the political right. Countries like Texas, Wyoming have been quicker to embrace bitcoin. Some of the early proponents in the Senate and Congress were more from the Republican side. But we do see it, when for example we had the hang-up with the infrastructure bill and how they were going to touch on digital assets, you had bipartisan politicians chiming in on that because it's really more about education versus a strictly polarized political view. Bitcoin itself is not really Republican or Democrat, and so I think different sides see different things in it.

These discussions are available on YouTube if you want to check them out, and we'll be following this event for more updates from MicroStrategy World 2022 to share with you. For more headlines, head to bitcoinmagazine.com.