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Peter Schiff says that 2023 will test the staying power of Bitcoin hodlers after Michael Saylor sells 700 BTC for tax relief.
Bitcoin critic and gold bug Peter Schiff mocked Bitcoin hodlers optimistic about 2023 despite the cryptocurrency falling 65% in 2022.
Hodlers Stand Firm Despite Schiff Mocking
After posing a question on whether hodlers would sell if Bitcoin reached $5,000, Schiff later asked Twitter how low the price would need to be before hodlers admitted they were wrong about Bitcoin.
At press time, the majority said they would keep Bitcoin even if it went to zero, while almost 10% would sell at $5,000. Interestingly, nearly one-fifth said they would sell if it went below $1,000. The remainder set the sub-$10,000 mark as the cutoff.
Several crypto company meltdowns and gloomy macroeconomic conditions have seen Bitcoin fall roughly three quarters from its peak of about $69,000 on Nov. 30, 2022. Investors looking to de-risk their portfolios amid rising inflation created selling pressure for Bitcoin, causing it to track equities and other risk assets downward.
Saylor Claims MicroStrategy Hodls for Humanity Despite Recent Sale
But the bear market, which some have predicted may morph into a full-blown recession, has not dulled MicroStrategy’s enthusiasm for hodling.
The company bought the dip again, adding 2,395 BTC to its balance sheet on Dec. 22, 2022.
In a recent Twitter Spaces roundtable, MicroStrategy’s Executive Chairman Michael Saylor said that technocrat Bitcoin investors hope for returns from the macroeconomic environment over five to ten years.
In contrast, he added that MicroStrategy belongs to a group of maximalists who see Bitcoin as “good for the human race,” and whose long-term investments are intended to promote Bitcoin’s adoption.
It is somewhat ironic then that the company sold 704 BTC on Dec. 2022 for roughly $12 million, only to quickly buy 810 BTC a few days later.
While holding onto his maximalist philosophy, Saylor admitted that selling Bitcoin introduces a capital loss that can offset the capital gains tax levied on MicroStrategy’s enterprise software business. A company pays capital gains tax on any profit made from the sale of an investment in a particular tax year.
“Acting in tax-efficient ways looks good to our shareholders,” he acceded. Shirish Jajodia, who is in charge of the company’s investor relations, said, “There is no change to our Bitcoin strategy, which is to acquire and hold Bitcoin for the long term.”
Will MicroStrategy Sell Bitcoin to Keep Shareholders Happy?
But the sale is at odds with Saylor’s promise in a Jan. 2022 Bloomberg interview. Speaking on Bloomberg Studio 1.0, he was pressed on whether MicroStrategy would sell its Bitcoin during an extended bear market.
“Never. No. We’re not sellers,” he said. “We’re only acquiring and holding bitcoin, right? That’s our strategy.”
Sean Farrell of Fundstrat said that MicroStrategy is exploiting a loophole that allows it to sell an asset and repurchase it quickly to reduce its tax burden. It can do this because most cryptos are not securities subject to wash trading rules.
But it does beg the question of whether MicroStrategy will exploit its Bitcoin reserves to keep its shareholders happy. Pressure from rising interest rates in 2022 will put pressure on its stock price, which is already down 74% year to date.
MSTR/USD | Source: TradingView
Additionally, the company’s labor costs could increase significantly as it builds software to bring Bitcoin’s Lightning Network to the masses