In a recent interview, Castle Island founder Nic Carter shared his views on MicroStrategy’s strategy, Ethereum's evolving role, and the potential for a US strategic Bitcoin reserve.
MicroStrategy's Strategy and Risks
Carter noted that MicroStrategy has innovatively used the fixed-income markets to issue debt and buy Bitcoin, allowing the company to capture a 2x premium over the net asset value (NAV) of its Bitcoin holdings. However, he warned investors about the risks associated with such a premium, cautioning that its stock price could diverge from Bitcoin’s trajectory in the event of a sell-off.
Ethereum's Role in DeFi Ecosystem
Carter emphasized that Ethereum plays a key role as the cornerstone of the decentralized finance (DeFi) ecosystem, hosting the majority of the total value locked (TVL) in DeFi applications. Ethereum remains the dominant platform for stablecoins and NFTs and has promising prospects for continued growth. “Ethereum has an opportunity here after following Bitcoin for a long time,” Carter said.
Potential US Strategic Bitcoin Reserve
Carter expressed skepticism about the possibility of a US strategic Bitcoin reserve, dismissing the possibility of Congress supporting such a move. He argued that switching the US financial system from the dollar to a Bitcoin-backed standard would undermine global trust in the dollar as a reserve currency. While smaller countries like Bhutan and El Salvador have adopted Bitcoin as part of their financial strategies, Carter argued that the US should avoid signaling a shift away from the dollar as the issuer of the global reserve currency.
Carter remains optimistic about Bitcoin's long-term prospects, suggesting it could reach a market value equivalent to gold, with each Bitcoin priced at $900,000. Yet, he cautions against inflated expectations from Bitcoin's short-term price movements.
