Kevin Duffy on bitcoin

I heard someone say bitcoin is 80% speculation and 20% hedge against the fiat money experiment blowing sky high. That sounds about right. While I’m largely agnostic on bitcoin, mainly because it is outside my circle of competence, the speculative forces are hard to miss. Exhibit A: MicroStrategy, a modest software business turned large-scale holding company for bitcoin, has been extremely aggressive with its buying lately. In the past at least, that’s been a sign of a top. 

On March 8, MicroStrategy (MSTR) issued $800 million worth of convertible notes paying just 0.625%, above the $650 million initially hoped for. The offering was so well received that, five days later, the company announced plans to raise another $500 million. The fact that investors are handing substantial sums of money over to MSTR on such favorable terms to go speculate in bitcoin is a clear red flag.

~ Kevin Duffy, "Mailbag," The Coffee Can Portfolio, April 15, 2024