The Problem with Bitcoin Monopolisation
Imagine you’re a farmer lucky enough to hold the monopoly on an exclusive crop—one that no one else can grow anywhere else on Earth. Such exclusivity would undoubtedly provide substantial influence over the market. This analogy resonates with how Bitcoin monopolisation is developing today, especially in light of MicroStrategy’s aggressive accumulation strategy.
Just this morning, I read that MicroStrategy, led by Michael Saylor, plans to borrow once again to acquire even more Bitcoin. Their last issuance of convertible notes raised $800 million, taking their total holdings to over **205,000 BTC** at an average price of about **$33,706** per coin. While this accumulation might seem like a visionary strategy, the risks are massive. Does no one else see where this is leading?
Michael Saylor is a savvy strategist, and his advocacy for Bitcoin is compelling. But the outcome he likely envisions—a global financial system with Bitcoin at its core and a highly profitable position for MicroStrategy—may be elusive. Even if he garners short-term gains from Bitcoin’s price fluctuations, he may be underestimating the broader implications of monopolising this decentralised currency and the extreme risks his company is taking on.
Going back to the farmer producing an exclusive crop, he has several strategic options: he can sell to select buyers, control the supply, or limit quantities at a time. This control over distribution gives him significant power over pricing. This is essentially what MicroStrategy and others with similar strategies are attempting with Bitcoin—cornering the supply to influence the market.
In addition, most of the narrative around Bitcoin’s financial story is shaped by American outlets like Forbes, Bloomberg, and CoinTelegraph. Although these platforms claim to have global reach with token writers across continents, the underlying perspective remains distinctly American. Outside of the U.S., retailers and investors (apart from a small, dedicated following) are less involved in the hype-driven trading practices that often inflate Bitcoin's value. This concentration of influence reinforces a narrative dominated by American interests, further isolating the global perspectives that might otherwise balance the discourse.
The American Influence on Bitcoin Custody and Its Limits
For years, the United States has sought to exert control over Bitcoin, with Coinbase and Binance emerging as two of the largest custodians and trading platforms. However, recent regulatory actions indicate that American authorities view these companies as merely temporary stewards. The belief is that tighter control and potential forfeiture of these institutions would bring down Bitcoin’s price significantly. Yet, Bitcoin is a global asset, and attempts at complete dominance are unlikely to succeed.
Saylor’s stance on custodianship aligns with this control-oriented perspective. He has indicated that he believes banks should eventually serve as Bitcoin’s custodians, a move that would fundamentally alter Bitcoin's decentralised nature. But with most of Bitcoin’s growth coming from regions outside of the US and its allies, this vision may be unrealistic. Many regions, including those participating in BRICS, have shown increasing interest in Bitcoin precisely because it operates outside traditional banking. The recent closure of the BRICS mBridge project, which sought to ease cross-border payments and strengthen these economies, underscores the shift. The end of this project appears to have spurred a price surge in Bitcoin, driven by demand from nations looking to circumvent dollar-dominated financial structures.
Assessing MicroStrategy’s Financial Risk
The magnitude of MicroStrategy’s exposure is substantial, increasing risk with each new Bitcoin purchase funded by debt. Currently, with Bitcoin’s price around $71,000, any drop below $38,000 could trigger margin calls on leveraged positions. Calculations from Mare Liberum’s Sovereign State Economic Reporting Service indicate that a decline to approximately $10,000 could result in losses of around $25,000 per coin.
MicroStrategy’s financial strategy is a double-edged sword; while these investments may support Bitcoin’s price momentum, they also heighten the potential for instability. Should Bitcoin fall below key thresholds, the resulting sell-offs could spiral, causing volatility and market corrections that impact MicroStrategy’s debt burdens and Bitcoin’s overall valuation.
With a total exposure of roughly $6.9 billion in Bitcoin, their current strategy remains precarious. If Bitcoin dips to sub-$10,000—a plausible scenario given its inherent volatility and diminishing retail interest—MicroStrategy’s position could quickly deteriorate. In such a downturn, they would hold BTC at values significantly below acquisition costs, facing painful margin calls and potential massive debt burdens affecting shareholders.
Diminishing Retail Investor Interest and the Role of Institutional Players
Bitcoin’s long-term sustainability hinges significantly on retail investor engagement. In recent months, however, our data has shown a **23.9% decrease in active wallets**—a signal that retail interest is tapering. Without consistent buy-in from smaller investors, institutional players who rely on continuous market liquidity may struggle to maintain inflated price levels.
Firms like BlackRock, Fidelity, and not forgetting the Chief Cheerleader -Standard Chartered have certainly amplified Bitcoin’s narrative by entering the space and promoting Bitcoin-based financial products. However, as retail involvement decreases, the market may no longer support Bitcoin prices at current levels. This fragile state underscores the risks of Bitcoin monopolisation, where a few powerful entities hold substantial control and bear the brunt of price instability, setting up a classic bubble scenario.
The Future of Bitcoin and Its Strategic Role
Bitcoin is indeed a powerful asset for cross-border transactions and holds immense potential as a tool for global finance, particularly in sectors such as manufacturing and food production where its decentralised structure offers benefits. But the core issue remains: aggressive borrowing to build a Bitcoin monopoly is ultimately a high-stakes gamble that could lead to losses if the bubble bursts.
For those invested in or considering following MicroStrategy’s model, it may be worth watching where MicroStrategy’s stock is in 12 months. The risk of significant losses per coin and exposure to margin calls could strain its financial stability if Bitcoin’s price plunges. Our forecast, aligned with a consensus of other grounded economists, suggests a sub-$10,000 Bitcoin is not out of the question. This scenario would expose the limitations of Bitcoin monopolisation and the inherent risks in Saylor’s high-leverage strategy.
In short, Bitcoin’s future remains bright in certain respects, but those looking to monopolise it should proceed with caution. Bitcoin’s true value lies not in high-stakes acquisitions but in organic growth as a decentralised, universally accessible asset. Just as the farmer’s control can dictate his crop's value, concentrated Bitcoin holders can temporarily influence its perceived worth. However, this monopoly-driven approach disrupts Bitcoin’s foundational ethos, potentially destabilising the ecosystem for future growth. This organic growth not only preserves Bitcoin's foundational ethos but also ensures that its value remains rooted in widespread adoption and trust, rather than speculative investments.
For those of us who’ve forgotten: Decentralised growth aligns with Bitcoin's original philosophy and secures its long-term potential by resisting control from any single entity.
And to Michael Saylor we say… Sir, we salute your chutzpah!
And what qualifies us to say all this?
Mare Liberum is a brokerage and consultancy firm headquartered in London, England, with satellite offices in 17 countries worldwide. We provide economic reform consultancy, reports, and transition strategy specifically tailored to sovereign nations, especially those within emerging markets. Our brokerage services facilitate the buying and selling of products from crude oil and LNG to consultancy on the acquisition of mining permits globally.
“Emerging countries are increasingly interested in economic independence from historically Western-controlled systems, prioritising solutions that support their specific needs."
Given the regions we operate in, we've observed a growing reluctance to depend on the U.S. dollar due to its over-leveraged role in global markets and the restrictions it imposes. This shift isn't about avoiding or undermining the dollar; it’s simply a matter of practicality. Many countries seek a straightforward cross-border settlement vehicle, while international suppliers to these regions want a fast, secure payment method for goods and services.
“Several years ago, we integrated Bitcoin into our operations,
transforming our approach to business transactions. “
Bitcoin has streamlined our payments, eliminating traditional fees and intermediaries, such as clearing banks and SWIFT, which are no longer necessary. Bitcoin’s transparency and built-in privacy have enhanced our transaction security. Today, we conduct Bitcoin on- and off-ramping daily, ensuring efficiency and trust within our global network.
A further advantage through the Bitcoin "...on- and off-ramping (the process of converting Bitcoin to fiat currency and vice versa) now a daily part of our operations." Exposure to its volatility is only ever limited to each transaction. Ensuring no matter what price we wake up to, Bitcoin is still a viable and now integral part of Mare Liberum Global settlement vehicle system.
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Writers Desk
Mare Liberum Global