Mystic Michael?
With a vested interest in talking up Bitcoin.
Yeah, very interesting.
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Microstrategy and Bitcoin
- Thread starter tecate
- Start date
With a vested interest in talking up Bitcoin.
Yeah, very interesting.
Did you say that 4 or 5 years ago when he predicted it would go to €100k???Mystic Michael?
With a vested interest in talking up Bitcoin.
Yeah, very interesting.
Okay, so I don’t even know if he did publicly predict 100k. But I remember thinking 30k was absolutely bonkers in 2017/18 and when it crashed back to 10k thinking show’s over, that’s that bubble burst. So what if it’s actually something different. Let’s be honest, fiat currencies and govt borrowing are doing the damn best to make it seem attractive!
Ps, I don’t believe it’ll go to 13m unless USD goes Weimar, I’m just playing devil’s advocate!
The 'deal' with MSTR put simply is that for it work as a financial instrument it requires two things....an at least stable but preferably increasing BTC price.....but there is no leverage here...the most important dynamic of the MSTR scheme is it requires new downstream investor money for existing investors to continue to do well. You and I might recognise this structure as a pyramid scheme.
This guy below has it pretty much down:
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The demise of Microstrategy's share price has been enjoyable to watch. In the "gravity" surely has to hit eventually type of way. Sadly it's probably in our pensions somewhere in some of the index funds. Should be a way to carve all the crypto nonsense out of those
Duke of Marmalade
Registered User
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Just short of RFK's prediction of $15m and note that this is not a prediction of something outside his control, it was the stated target of the soon to be elected administration.
$13m would mean a market cap of 21x13 trillion, that is $273Tr. The whole of the World's stockmarkets just recently passed the $100Tr mark and with the US representing $70tr of that; all the gold in the World is worth $35Tr.
Assuming that the vast bulk of this perceived wealth would be in the hands of US citizens (if it is a result of Trump/RFK strategy) it would amount to a perceived wealth backed by nothing of over $2 million per household. Who's going to collect the bins? AI can't do everything.
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Brendan Burgess
Founder
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Brilliant
Brendan Burgess
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I still find it hard to follow.
Microstrategy had a big holding in BTC
They issued bonds to people at 0% coupon to buy more BTC.
Was there some plan to repay these bonds? I thought that they were convertible?
If Microstrategy has to repay the bonds, they can't.
The bondholders lose.
The shareholders lose.
It never made any sense.
Microstrategy had a big holding in BTC
They issued bonds to people at 0% coupon to buy more BTC.
Was there some plan to repay these bonds? I thought that they were convertible?
If Microstrategy has to repay the bonds, they can't.
The bondholders lose.
The shareholders lose.
It never made any sense.
Brendan Burgess
Founder
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The company ended the year with $2.25 billion in cash, which would allow for 2.5 years of dividend coverage on its preferred stock as well as interest on debt.
So it does have an interest bill.
So it does have an interest bill.
Brendan Burgess
Founder
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Good FT article here which says what we have been saying in this thread all along.
Behind a paywall though
Strategy’s common stock is still way up since the company went all-in on bitcoin, driven by a feedback loop that is now starting to unwind. For years, shares traded at two, even three times above the value of its bitcoin. The large premium enabled the company to issue new shares, use the proceeds to buy more bitcoin, and push prices higher. Each round reinforced the cycle: higher bitcoin prices widened the premium, making the next issuance ever more accretive. The process became self-reinforcing.That is how the equity could have risen 10 times even while the underlying bitcoin position stands today with no mark-to-market gain. The Saylor premium did most of the work.This “infinite money glitch” seemed to hit a hitch in late 2024 with the “21/21” program: $42bn of planned equity and debt issuance to buy more bitcoin. The plan had breathtaking size and ambition, but the breakneck pace of execution exposed the limits of the model. Strategy issued shares so aggressively that dilution started to erode the very premium that made the strategy viable. The stock peaked at $543 intraday on November 21 2024 and now trades below $150, even though bitcoin itself has declined by single-digit percentages in that time. Indeed, over the last year the stock has massively underperformed the asset it is supposed to beat or at least track. The virtuous circle has started to turn into a vicious cycle.
Except the bitcoin itself has been roughly breakeven. Strategy’s average purchase price is around $76,000, which is close to today’s market price. For all the sound and fury of Saylor’s social media posts, what he has done, in aggregate, is buy bitcoin at prices that, so far, have neither made nor lost much money.
What all this exposes is that Strategy’s model depends on two things: a rising bitcoin price and continued access to capital markets. With cryptocurrencies weakening and the NAV premium evaporating, the market is calling into question both conditions.
Behind a paywall though
Strategy’s common stock is still way up since the company went all-in on bitcoin, driven by a feedback loop that is now starting to unwind. For years, shares traded at two, even three times above the value of its bitcoin. The large premium enabled the company to issue new shares, use the proceeds to buy more bitcoin, and push prices higher. Each round reinforced the cycle: higher bitcoin prices widened the premium, making the next issuance ever more accretive. The process became self-reinforcing.That is how the equity could have risen 10 times even while the underlying bitcoin position stands today with no mark-to-market gain. The Saylor premium did most of the work.This “infinite money glitch” seemed to hit a hitch in late 2024 with the “21/21” program: $42bn of planned equity and debt issuance to buy more bitcoin. The plan had breathtaking size and ambition, but the breakneck pace of execution exposed the limits of the model. Strategy issued shares so aggressively that dilution started to erode the very premium that made the strategy viable. The stock peaked at $543 intraday on November 21 2024 and now trades below $150, even though bitcoin itself has declined by single-digit percentages in that time. Indeed, over the last year the stock has massively underperformed the asset it is supposed to beat or at least track. The virtuous circle has started to turn into a vicious cycle.
Except the bitcoin itself has been roughly breakeven. Strategy’s average purchase price is around $76,000, which is close to today’s market price. For all the sound and fury of Saylor’s social media posts, what he has done, in aggregate, is buy bitcoin at prices that, so far, have neither made nor lost much money.
What all this exposes is that Strategy’s model depends on two things: a rising bitcoin price and continued access to capital markets. With cryptocurrencies weakening and the NAV premium evaporating, the market is calling into question both conditions.
Brendan Burgess
Founder
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- 58,245
Exactly as predicted earlier in this thread.
Sister Sara
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Good call @Brendan Burgess.
I like Saylor. He gets Bitcoin and is passionate about it obviously.
I was impressed when he started adding Bitcoin to Strategy's reserves.
However, he engaged in other financial entanglements and it looked to me that he was risking an awful lot more than was needed. And the predication here is bearing fruit.
He appears to be remain quite sanguine despite the price fall. See how we go.
I like Saylor. He gets Bitcoin and is passionate about it obviously.
I was impressed when he started adding Bitcoin to Strategy's reserves.
However, he engaged in other financial entanglements and it looked to me that he was risking an awful lot more than was needed. And the predication here is bearing fruit.
He appears to be remain quite sanguine despite the price fall. See how we go.
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