Wall Street’s crypto messiah under attack from non-believers

BTC-USD +1.57% MSTR +3.89%

“I’m going to be buying Bitcoin at the top forever,” crypto evangelist Michael Saylor told Yahoo Finance last December.

“Just keep buying Bitcoin with your spare capital,” he advised people. “It’s going to appreciate against the dollar forever.”

Through Strategy, his company, Saylor has hoarded digital coins with a combined current market value of $56bn (£43bn).

He has transformed the business he first founded as a software provider into the world’s first and largest Bitcoin “treasury” – a company dedicated to holding the coins.

His bet has largely paid off – until the last few weeks, that is.

The value of the cryptocurrency surged to a record high after Donald Trump won the US election last year. But since it hit a peak of $126,000 in October, it has plunged by 30pc to around $87,300.

The value of Saylor’s company has plunged with it, slumping by an even more pronounced 60pc since the summer. Strategy warned on Monday that it would suffer a loss of $5.5bn in 2025 if the price of Bitcoin did not recover before the end of the year.

The Nasdaq-listed company – which was known as MicroStrategy until a rebrand earlier this year – also announced that it had sold some of assets to set up a $1.44bn cash reserve to pay its dividends.

Saylor said this “will better position us to navigate short-term market volatility”. Analysts see it as a move designed to stop a panic sale of its stock.

If that was the case, then it hasn’t exactly worked. Strategy’s share price plummeted by as much as 12.2pc on Monday after the statement, before partially recovering. During the worst of its slump, the company’s market cap was worth $10bn less than its net Bitcoin holdings.

The events of the last few days have been a field day for Saylor’s critics. Peter Schiff, the founder of a gold dealership, said on X: “The stock is broken. The business model is a fraud, and @Saylor is the biggest con man on Wall Street.”

Saylor is familiar with plummeting share prices. Back in 2000, he lost $6bn of personal wealth in a single day after his company became ensnared in an accounting scandal that sent its share price tumbling by 62pc.

The Securities and Exchange Commission later brought accounting fraud charges against MicroStrategy’s executives. Saylor settled, without admitting or denying the charges, paying back $8.2m in profits and a $350,000 penalty.

That is not his only brush with authorities. Last year, Saylor and Strategy agreed to pay $40m to Washington to resolve a tax fraud lawsuit that alleged Saylor had defrauded the city of more than $25m in income taxes by pretending that he did not live in his 7,000 sq ft Georgetown penthouse.

It was the largest tax fraud recovery in Washington’s history – but this is not what Saylor is most famous for. Since the Covid pandemic, he has emerged as a self-styled Bitcoin messiah who has driven a revolution in the crypto sector, working to open up digital assets to institutional investment.

In 2020, he announced that MicroStrategy had spent $250m on 21,454 Bitcoin. The company rapidly became the world’s largest store of the crypto currency and now holds 650,000 Bitcoin, or 3.1pc of all of the global total.

Dozens of copycat firms have sprung up to imitate Saylor’s approach.

“He made it his whole personality and he became kind of a cult figure,” says Adam Morgan McCarthy, of Kaiko, a digital asset data company.

“The company is a vessel for this kind of brand that is Michael Saylor on Bitcoin.”

Born in 1965 in Lincoln, Nebraska, into a US Air Force family, Saylor studied at the Massachusetts Institute of Technology before founding Strategy in 1989. Prior to 2020, the business was best known for developing data mining tools and business analytics software.

His fervour for Bitcoin is something of a Damascene conversion. Saylor had been cool on the prospects of cryptocurrencies, Tweeting in 2013 that “Bitcoin’s days are numbered”.

But for the past five years he has been the digital currency’s most aggressive advocate. His X profile has now been changed to an avatar with “laser eyes”, a common sign of support for cryptocurrency within the industry, and he has become a celebrity of the crypto podcast circuit, claiming Bitcoin could climb as high as $21m per coin.

In one appearance, he gleefully issued a retort to his critics: “Have fun staying poor!”

For a company called Strategy, its tactics are remarkably simple. The firm buys Bitcoin – funded using a mixture of debt and equity products, many of which feature dividends that the company has to pay out to shareholders – and then it holds them. As the price of Bitcoin climbed, so did its share price.

Crucially, Strategy’s stock became a popular way for institutional investors to gain exposure to crypto without purchasing coins directly.

Filings at of the end of September show that Strategy’s shareholders include mainstream Wall Street names including Vanguard, BlackRock and Cantor Fitzgerald.

These firms have very low exposure to the market rout as they hold a broad universe of stocks and bonds from around the world – but the current downturn could put big institutions like these off buying more Strategy stock and other crypto holdings. This is a problem for the market – and for Saylor.

“Most of the rise we have seen in the Bitcoin price has come from institutions buying in,” says Nicolas Vaiman, the founder of Bubblemaps, a crypto intelligence firm. “We might see that a lot of those funds that came into BTC are not going to come back.”

Furthermore, there is little sign of an immediate recovery for Bitcoin. Crypto was once its own galaxy but these digital assets are no longer divorced from the rest of financial markets.

Companies such as Strategy have led the crypto sector to become much more corporate in the recent years. As a result, it has become much more responsive to mainstream market drivers.

Morgan McCarthy thinks the stock market will follow the crypto fall. “The Trump bump after the election, all that is gone. There’s only going to be more harm out of the uncertainty in the US,” he says.

“I think Bitcoin is probably the first place you’re deleveraging or de-risking if you’re in any way frightened about what is happening.”

As for Saylor, his commitment to cryptocurrency appears undiminished.

A pinned tweet on his X page says: “#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”

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