MicroStrategy CEO Michael Saylor said traditional financial markets are not ready for bitcoin-backed bonds.
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MicroStrategy CEO and bitcoin (BTC) perm, Michael Saylor, believes that traditional financial markets are not quite ready for the Bitcoin-backed bonds.
Saylor told Bloomberg on Tuesday that would love the day to come when bitcoin-backed bonds to sell like mortgage-backed securities, but he warned that “the market is not quite ready for that right now The next best idea would be a term loan from a major bank.”
MacroStrategy, a subsidiary of @MicroStrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase #bitcoin. $MSTR $SIhttps://t.co/QYw2ZgeE3U
—Michael Saylor⚡️ (@saylor) March 29, 2022
MacroStrategy, a subsidiary of @MicroStrategy, has closed a USD 205 million collateralized bitcoin loan with Silvergate Bank to buy bitcoin. $MSTR $SIhttps://t.co/QYw2ZgeE3U
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The statements come two days after MacroStrategy, MicroStrategy’s subsidiary specializing in bitcoin, announced that it had taken out a $205 million BTC collateralized loan to buy even more Bitcoin. This loan was unique as it marked the first time that MicroStrategy had borrowed against its own bitcoin holdings – which are currently valued at approximately $6 billion- to buy more of the cryptocurrency.
Saylor’s comments they also follow El Salvador’s recent decision to postpone the issuance of its $1 billion BTC-backed “Volcano Bond” on the 23rd. of March. According to the Minister of Finance of El Salvador, Alejandro Zelaya, the decision to delay the bond was due to the general financial uncertainty in the world market. driven by the conflict in Ukraine.
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On a possible warning to El Salvador, Saylor said the country’s Volcan Bond was somewhat riskier than his company’s bitcoin-secured loan .
“That is a hybrid sovereign debt instrument as opposed to a pure bitcoin-treasure game. That has its own credit risk and has nothing to do with the risk of bitcoin itself entirely.”
Saylor added that he remains extremely bullish on the long-term potential of bitcoin-based bonds, even saying that it would be a good idea for cities like New York to use bitcoin as a debt instrument.
“New York can issue $2 billion of debt and buy $2 billion of bitcoin: bitcoin is yielding 50% or more, debt costs 2% or less.”
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From your initial USD investment 250 million in BTC as of August 2020, MicroStrategy has now amassed a substantial 125,051 BTC, which at the current price of $44,547, equates to $5.5 billion. MicroStrategy has made a number of separate BTC purchases using the company’s cash on hand as well as proceeds from bond sales senior convertibles in private offers to institutional buyers.
Saylor’s actions have gradually transformed MicroStrategy into a partially leveraged bitcoin holding company, with actions closely correlated to the price of bitcoin.
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