His Bitcoin strategy may not work for you.
If you have watched recent videos this year on Bitcoin, you may have come across Michael Saylor giving his advice on Bitcoin and the cryptocurrency market. Michael Saylor is the founder of MicroStrategy that has made large investments in Bitcoin since 2020.
Michael Saylor is a latecomer to the cryptocurrency space but he is making a big impact as an investor. His company MicroStrategy owns about 91,579 Bitcoin valued at $3.45 Billion at the time of this writing.
Chronologically, these are the moves MicroStrategy made buying Bitcoin since 2020.
2. September 15, 2020. Saylor doubled down, adding another $175 million to MicroStrategy’s balance sheet. That $425 million bought MicroStrategy’s total to 38,250 BTC.
3. February 17, 2021. Saylor revealed that MicroStrategy was selling $900 million in debt to buy more BTC. Bitcoin was at $49,600.
4. March 1, 2021. MicroStrategy held 90,859 BTC which it purchased for about $2.2 billion.
5. June 2021. MicroStrategy was selling $400 million in corporate bonds to buy more Bitcoin.
“When Bitcoin hit a new all-time high of $61,683 later in the month, that investment was worth a jaw-dropping $5.6 billion. MicroStrategy was sitting on paper profits of $3.4 billion.”
Michael Saylor was one of the recent Cryptocurrency investors that encourages other companies to invest as well. Saylor even encouraged Elon Musk to invest in the Cryptocurrency space.
“Michael Saylor’s decision to invest MicroStrategy’s treasury has paved the way for other corporate leaders to explore adding Bitcoin to their balance sheets,” said Diogo Mónica, co-founder and president of crypto custodian Anchorage.
In multiple videos on YouTube, Michael Saylor has mentioned that companies should take out a loan to buy Bitcoin. Companies are usually in a different category than people and they can usually get a loan to finance this investment.
If a person were to do this, it could easily backfire.
Companies have a longer time frame to make this investment. Many people live paycheck to paycheck and have little savings. If Bitcoin suffered a crash as it did after 2017, many people would see their investment vanish.
The same would happen to MicroStrategy.
Edward Moya, a New York City-based senior market analyst for currency trading firm Oanda Corp and Bitcoin believer gave his opinion on MicroStrategy.
“That would really destroy [MicroStrategy]. Whatever few ‘buy’ ratings they have would go to ‘sell,’” Moya says. “It would be extremely difficult for the company to bounce back from that.”
There is always the chance the Bitcoin market could collapse. For people to follow Saylor’s advice is dangerous. Some people do not have a plan when it comes to investing. You can look at the high-profile sport and movie stars who made millions and eventually became bankrupt.
If millionaires can become bankrupt over bad investments or deals, it is likely anyone can lose money, rich or poor.
Even though Michael Saylor is recommending others to invest in Bitcoin and take out loans to buy Bitcoin, his message does not apply to everyone. Saylor is in a much better position to make large investments and taking out loans in this digital currency.
In 2017, when Bitcoin nearly reached $20,000, some people made risky investments. Some people took out loans, traded in and out of Bitcoin, and other similar events.
Before investing in Bitcoin or any cryptocurrency, you need an exit plan.
Ask yourself these questions:
- When do you plan to sell your cryptocurrencies?
- What do you plan to do if the cryptocurrency makes a 10X or 100X return?
- Does your exchange provide a summary of your trades?
- When you cash out, will you have money to pay your taxes?
These questions are important for you to have an answer. If you don’t have an answer you could face penalties from the IRS, lose your investment, or spend all of your gains.
Instead of investing, you need to have a plan for your earnings. You don’t want to be an investor who made a fortune but lost it all overnight.
It’s important not to be too greedy and have an exit plan for your cryptocurrencies.