A 3-minute presentation by Michael Saylor, executive chairman of Bitcoin Development Company MicroStrategy (MSTR), which has seen its stock price surge as much as 2,500% since adding bitcoin to the company’s treasury strategy more than four years ago, was meant to convince shareholders otherwise.
The argument by MicroStrategy Executive Chairman Michael Saylor tried to convince Microsoft shareholders is absolutely reasonable for hedging the funds underlaying in capital which amounted to 200 billion dollars for past 5 years by issuing dividends and stock buybacks instead of purchasing crypto currencies.
Cryptocurrencies have delivered strong returns relative to traditional assets on both an absolute and a risk-adjusted basis over the past decade, with bitcoin generating an annualized return of 47.88% and a Sharpe ratio of 2.08, compared to 10.26% and 0.84 for the S&P 500, according to data from Portfolios Lab as of August 9, 2023. But the common tradeoff has been exposure to high volatility. For many investors, managing that volatility can be challenging, and that’s led to increasing interest in hedging that risk.
