Several market analysts have shared their insights on the driving force behind the recent surge of Bitcoin adoption, and former MicroStrategy CEO Michael Saylor has added his opinion to the mix.
Inflation and Counterparty Risks Drive Bitcoin Adoption
In a recent CNBC interview, Saylor highlighted two factors that are contributing to the widespread adoption of Bitcoin. He firstly spoke on the issue of inflation and how it impacts investors’ confidence in fiat currencies. As a result, investors turn to safe-haven and risk-reducing assets like Bitcoin, which is not valued on cash flows but rather as a currency derivative.
“There’s the macroeconomic concern about inflation and as inflation takes place, people lose confidence in fiat currencies. That means they start to realize that everything valued on cash flow is a currency derivative and bitcoin is not valued on cash flows,” he explained.
Saylor also mentioned that the recent banking crisis, including the failures of Silvergate Bank, Signature Bank, Silicon Valley Bank, and First Republic Bank, has also contributed to investor uncertainty and a lack of faith in the banking system. This has further driven Bitcoin adoption as investors realize that the cryptocurrency operates as a bank in cyberspace run by software that is secure and not corruptible.
“The failure of the banks… causes people in the Western world to start to lose a little bit of faith in the banking system and they remember that Bitcoin is a bank in cyberspace run by incorruptible software… So, the combination of that concern about inflation and counterparty risks with banks is driving Bitcoin’s adoption,” he said.
MicroStrategy Stays Committed to Long-term BTC Plan
Saylor maintained his confidence in Bitcoin’s potential and reiterated that MicroStrategy will continue to accumulate more of the digital asset, despite experiencing significant losses at one point on its approximately 140,000 BTC portfolio. Saylor explained that the business intelligence and software firm has recorded significant growth in Q1 and will use its profits to pay off debt interest while acquiring more Bitcoin.
“The real key with Bitcoin is being able to hold on to it and stomach the volatility. We have conditioned our shareholders and our bondholders to understand that we’re long-term HODLers, and because everybody is aligned in that interest, we’re able to weather that volatility, and we end up doing very well as Bitcoin recovers,” he said.
