MicroStrategy’s Michael Saylor has congratulated himself for what he believes was one of his biggest life decisions ever; choosing to invest in Bitcoin over gold, one year ago.
In a recent tweet, the Bitcoin maximalist expressed his joy at how Bitcoin had bitten odds to outperform gold, the world’s most famous traditional store of value asset, by exponentially growing MicroStrategy’s investments in the crypto asset at an unprecedented rate.
The statement received an immediate endorsement by Ricardo Salinas, a Mexican Billionaire who has deep skin for Bitcoin shouting “Totally agree!”
According to a fact sheet by Microstrategy shared by Saylor showing Bitcoin vs Gold performance, whereas investors who bought gold twelve months ago saw 80% of their investments go to the duct, the company made over 400% returns in the same period. The volatility of Bitcoin in relation to gold for the last month has also remained high at 0.55:0.12 in ratio.
Microstrategy now owns 108,992 Bitcoins, thanks to Saylor’s ingenuity
Michael Saylor who has been a diehard promoter for the adoption of a Bitcoin standard has carved out a name for himself as the Godfather of Bitcoin dips through his aggressive Bitcoin buying sprees using Microstrategy’s funds every time the asset’s price corrects.
In June the Virginia-based business intelligence company purchased approximately 13,005 Bitcoins for approximately $489 million in cash at an average price of around $37,617 per coin inclusive of fees and expenses. Last month Saylor announced that the company had doubled down on its Bitcoin buys with an additional 3,907 bitcoins at an average price of $45,294 per coin.
As per the last purchase, the company is currently holding 108,992 Bitcoins which he said had been acquired at an average price of $26,769 per Bitcoin. The company has shown no sign of backing out in purchasing the asset.
Bitcoins absolute scarcity is key to its success
There is however an explanation as to why Bitcoin is beating gold in many ways than ever witnessed. According to Siby Suriyan, a financial analyst and economist, there are two levels of scarcity for assets.
He notes that Bitcoin is an absolutely scarce asset, meaning that no matter how much energy is put into mining Bitcoin, its issuance rate and hard-capped supply remain the same. This ultimately leads to very high demand for the asset which explains its colossal returns as price skyrockets, attracting more investors.
On the other hand, gold is relatively scarce. This means that although the production of gold is not capped, the energy put towards mining it is relative to its value. If more energy is put into mining the asset, it would flood the market leading to a drop in price. On the other, the dollar fails the scarcity test as it can be printed at will. This tells why Bitcoin has and continues to render traditional store of value assets such as gold and fiat money insignificant.