Michael Saylors recent Bitcoin sales are a worry for crypto investors

You can add another brick to the “wall of worry” facing the $2.27 trillion crypto market – and it has “Michael Saylor” written all over it.Saylor runs a company called Strategy, formerly known as MicroStrategy.It was a software company that under Saylor’s leadership has been transformed into what crypto types call a major “hoarder”  of Bitcoin.His strategy goes something like this: He sells company stock and preferred shares while purchasing lots of Bitcoin.

Strategy currently holds around 4% of all the available digital assets.That’s a lot of Bitcoin, around 800,000 of them.With Bitcoin last year hitting all time highs of about $120,000, his investors have done well (60% plus return over the last five years).

That is, until recently when shares of Strategy began reflecting the downdraft in digital coins. The big question: Is Saylor going to turn the current Bitcoin winter into the storm of the century for crypto? Along the way, there have been plenty of Saylor skeptics; the legendary short seller Jim Chanos is one.Chanos who began shorting Strategy stock last year in an arbitrage play he described on my “Risk and Return” podcast.Another has been my podcast partner, Bob Sloan, a longtime capital markets professional who now runs S3 Partners, a well-regarded market data firm  that is often referred to as the gold standard for investor and trader positioning.

Bob has long warned of the dangers that Saylor posed for Bitcoin and crypto in general.Any market that leans heavily on one investor buying and not selling is courting trouble when that buyer does become a seller, which given the volatility of Bitcoin was always inevitable, Sloan argued.Or as he put it: “Funding was required to keep his buying going.No funding equals forced selling.”Bob’s bunny has a good nose (he’s seen plenty of market ructions during his long career).

I was reminded of this Monday when my old colleague at the Wall Street Journal, Jonathan Weil, did a deep...