Out With The New, In with The Old (Money)
Catt Calls 2025 Big Calls
My 5 and 7 year old daughters still believe in Santa Claus. Early Christmas morning a Russian dwarf hamster arrived in our living room. Amongst all the excitement I reflected on the magical myth of Santa who had flown with the hamster, plus presents for ALL the children in the world, from the North Pole to arrive in a cage in our living room.
Santa and his helpers had also provided a home, a slide, a hamster wheel (the little rodent is very active at night), a straw bed and a corncob dangling from the wire ceiling of the cage.
I would certainly believe in a little old man with a white beard and a red suit, if every year he kept filling my Christmas stocking.
Bitcoin: The Gift That Keeps On Giving
Bitcoin investors still apparently still believe in Santa Claus - and who can blame them? If you had bought Bitcoin (I wish I had) after a New Year’s Eve epiphany in 2023, you would have doubled your money by now.
Bitcoin is now worth almost one trillion US dollars more than it was a year ago, reaching a valuation of $1.9 trillion—just shy of the world’s largest retailer, Amazon, at $2.05 trillion. The $970 billion in value Bitcoin gained between January 1st and Christmas Day, December 25th, 2024, surpasses the lifetime achievements of Warren Buffett at Berkshire Hathaway, which had a Christmas 2024 capitalisation of $890 billion
Bitcoin vs Elon
Elon Musk leveraged his considerable influence and resources to support Donald Trump’s electoral success last November. Following Trump’s election, the aggregate valuation of the six companies Musk controls (Tesla, Space X, X, XAI, Neuralink and the Boring Company) increased by $900 billion, with the majority of the gains occurring since Trump was elected [The Economist December 26th, 2024].
Nevertheless, Bitcoin outpaced Musk’s impressive $900 billion uptick, adding an incremental $970 billion in valuation by Christmas.
Bitcoin: More Precious Than Gold
Two-thirds of Americans own their own home, and over 60% own stocks.
But what about crypto or gold? This might surprise you: Bitcoin which was conjured up just 16 years ago by a mysterious Japanese fellow—is now more popular among American adults than gold or silver.
Yes, you read that right. Gold and silver, which have been around for over 5,000 years and once formed the scaffolding of the US dollar (as laid out in the 1792 US Coinage Act), are now less favoured by Americans than Bitcoin, which has existed for less than two decades.
Bitcoin alone is worth more than the entire crypto asset class combined, which totals $3.5 trillion. According to ChatGPT, around 15% of American adults own Bitcoin, compared to 11% and 12% who own gold and silver, respectively.
Bitcoin: Trumped
Donald Trump, like most politicians, said whatever he needed to get elected - including hinting at the possibility of creating a national crypto reserve.
On election day, last November 5th, Bitcoin was worth $68,000 per coin. Today, it stands at approximately $98,000, marking an impressive 40% increase. Notably, $19 billion - or half of all 2024 inflows into crypto funds - has occurred since Trump was elected.
Michael Saylor: The Cult of Bitcoin
Perhaps the greatest cheerleader for Bitcoin is Michael Saylor, Executive Chairman and Founder of MicroStrategy (MSTR: NASDAQ).
We admire Saylor's chutzpah, if not his dazzling ego. Russell Crowe has nothing on this bloke!
What fancy dress enthusiast would not LOVE this guy? With 3.9 million followers on X, Saylor is a charismatic cult figure in the crypto world, known for saying things like Bitcoin is "the best store of value in human history".
Twitter/X group “Irresponsibly Long $MSTR” has 25,000 followers.
Here is a post from one of those followers:
Saylor, more opportunist than evangelist, also said in 2013:
“Bitcoin’s days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling”.
About his company’s software, (MicroStrategy makes software too), Michael Saylor, said:
"Our software is going to become so ubiquitous, so essential, that if it stops working there will be riots".
In March 2000 MicroStrategy was forced by the SEC to restate its earnings and the share price fell from $333 to $0.42.
Saylor’s leveraged bet on Bitcoin has performed spectacularly - the MicroStrategy share price is up about 25 times since August 2000 and has just joined the Nasdaq 100 Index.
MicroStrategy became a proxy for Bitcoin, when on August 11th 2020 it bought 21,454 Bitcoins for $250 million, at an average price of $11,653 per Bitcoin.
MicroStrategy's share price was then about US$14 per share compared to over US$350 per share on Christmas Day 2024.
MicroStrategy's business strategy is simple, issue equity and debt to buy more Bitcoin pushing up Bitcoin’s price, hence MicroStrategy’s price, so it can issue more securities and buy more Bitcoin.
Where did Saylor get the idea to buy bitcoin? He read a book called "The Bitcoin Standard" by Saifedean Ammous (see foreword by Saylor page xiii).
The market capitalisation of MicroStrategy on Christmas Day 2024 was US$88 billion, double the value of its $44 billion holding of 444,262 Bitcoin.
MicroStrategy = Overpriced Bitcoin HoldCo
MicroStrategy has had negative operating cash flow for two, of the last three quarters, and reported a loss of $1.72 per share in the third quarter, of 2024, on revenue $116 million. In other words, we should think of MSTR as a Bitcoin holding company, with little else to recommend the shares.
MicroStrategy has total liabilities of $7.6 billion, including $3 billion in convertible bonds issued after it announced plans to raise $21 billion in bonds and $21 billion in equity on October 31st, 2024.
In November, MSTR sold $2 billion worth of its Class A Common shares and used the proceeds to purchase Bitcoin at an average price of $74,463.
In December, the company sold another $2.1 billion of its stock to buy Bitcoin at an average price of $98,783.
Saylor recently said on CNBC:
“We’ll just keep buying the top forever; every day is a good day to buy bitcoin,”
The Saylor Fan Club
According to a December 23rd proxy filing by MicroStrategy (MSTR) with the United States Securities and Exchange Commission (SEC), shareholders have been asked to approve the following:
Increasing the number of authorised MSTR common shares from 330 million to 10.33 billion—a 31-fold increase.
Increasing the authorised MSTR preferred shares from 5 million to 1.05 billion.
Automatically issuing equity to new directors upon their appointment to the Board of Directors of MSTR.
As of October 21st, MicroStrategy had 202.6 million shares in circulation. Since then, the company has issued an additional 14.77 million shares, raising approximately $5 billion.
In its December 23rd SEC 8K filing, MicroStrategy disclosed that it has now spent $27.7 billion to purchase 444,262 Bitcoin at an average price of $62,257 per coin. Michael Saylor describes the, one-time software company that he founded, as the “Bitcoin Treasury Company.”
In November, MicroStrategy traded at over three times the value of its Bitcoin holdings and at two times the value on Christmas Day. However, its aggressive plan to issue $42 billion in securities to acquire more Bitcoin is shifting the premium into a discount.
The only plausible reason to choose MicroStrategy over Bitcoin, or the $48 billion iShares Bitcoin Trust ETF, would seem to be unwavering loyalty to Saylor himself.
The Future of Money: Bitcoin or Gold?
While Americans buy crypto China can’t get enough gold - official purchases by The People’s Bank of China are, according to Goldman Sachs, only a fraction of their actual gold accumulation:
Perhaps it’s because I was born in 1971, not in the nineties or later, that I ‘missed’ crypto. I’ve been watching Bitcoin rise from just a few thousand dollars per coin to its current heights. Bitcoin is a risk asset, closely correlated with Nasdaq, and both reached all-time highs in December 2024.
In contrast, gold and silver have no such correlation. They stand apart as safe havens, poised to serve investors well in the event of a sell-off in risk assets triggered by rising treasury yields.
Is Bitcoin a Short Squeeze?
Do you remember the Hunt Brothers’ silver squeeze?
Between 1979 and March 1980, the Hunt brothers accumulated 200 million ounces of silver—9% of the 2.2 billion ounces ever mined. Most commentators believed the Hunts controlled 50% of the actively traded silver market.
The Hunt brothers drove the silver price from $6 in 1979 to $50 an ounce by January 1980. However, on March 27th, 1980, they missed a margin call, and the silver price collapsed from $50 to $11 an ounce.
MicroStrategy owns just over 2% of the total available Bitcoin. What remains unclear is the Bitcoin free float, the identities of its major holders, and how they might respond to a 2008/9-style liquidation of risk assets.
What we do know is that Bitcoin fell 80% between its 2021 peak and its 2022 low after the crypto exchange FTX went bankrupt.
MicroStrategy can arguably be considered a ‘meme stock’ due to Saylor’s cult-like following. During the Covid-19 pandemic, the rise of meme stocks like GameStop, AMC Entertainment, and Bed Bath & Beyond showcased similar trends. Three months after peaking in 2021–2022, these stocks lost an average of 68% of their value.
In 2025, I expect blind faith in cryptocurrencies—and in their self-appointed spiritual leader, Michael Saylor—to be shattered, as bond vigilantes turn off the supply of easy money.
2025: Short Mister Bitcoin, Long Precious Metals
I recently bought MicroStrategy March $200 puts, anticipating that gravity will soon take hold. As Bitcoin corrects alongside Nasdaq, I expect MicroStrategy shares to fade under a blizzard of new stock issuance, falling below the value of its Bitcoin holdings.
On the other hand, I am buying more Mithril Silver & Gold (MTH:ASX) for my family at current prices around AUD$0.40–0.50. I’m optimistic about record-high silver and gold prices in 2025. Mithril is accelerating exploration at its high-grade Copalquin Project in Mexico, following results like the 7 metres at 144 g/t gold and 1,162 g/t silver from just 18 metres depth announced in September. I believe the combination of rising gold and silver prices and Mithril’s planned quadrupling of drilling metres in 2025 will richly reward shareholders.
By Christmas 2025, I anticipate my short bet on Mister Bitcoin and my long bet on Mithril will have delivered—and Santa will still be hard at work for another year.
