Originally published on: October 28, 2024
Have you ever considered the power of the time value of money (TVM) in your investment strategy? Michael Saylor, the CEO of MicroStrategy, has harnessed this concept to combat fiat devaluation and achieve remarkable returns through Bitcoin. By understanding the earning potential of money and leveraging Bitcoin’s deflationary properties, Saylor has built a massive crypto treasury that outpaces inflation and preserves wealth over time.
Saylor firmly believes in using Bitcoin as a hedge against inflation, and his investment philosophy is centered around maximizing returns through strategic leveraging of debt financing. By borrowing money to acquire Bitcoin holdings, Saylor is betting that the future appreciation of the cryptocurrency will far surpass the cost of borrowing, amplifying gains and outpacing inflation.
MicroStrategy’s crypto treasury, boasting over 240,000 BTC valued at $14 billion, serves as a testament to the success of Saylor’s time value of money strategy. Through detailed economic calculations and a firm belief in Bitcoin’s potential for high growth, Saylor has set a blueprint for other companies and individual investors looking to preserve wealth and combat the devaluation of fiat currency.
In an example illustrating the effectiveness of his strategy, Saylor’s $250 million investment in Bitcoin in 2020 surged to $1.45 billion by 2024, while the same amount held in cash would have dwindled to $203.16 million due to inflation. This stark difference exemplifies the power of Bitcoin in preserving and significantly growing wealth compared to traditional fiat holdings.
Saylor’s strategy has inspired other companies, like Marathon Digital Holdings and Tesla, to incorporate Bitcoin into their treasury management strategies. By taking a page from Saylor’s playbook, investors can tap into the potential of Bitcoin as a liquid and deflationary asset that holds promise in times of high inflation and currency devaluation.
While Saylor’s time value of money strategy may not be suitable for all investors, particularly during bear market periods, it presents an intriguing opportunity to participate in the rapid growth potential of Bitcoin. As Saylor continues to amass his Bitcoin treasury and predict outsized gains, the concept of leveraging the time value of money in financial strategies may become a popular investment philosophy in the years to come.
