After experiencing a recent surge, Bitcoin has been played with new tricks. A brand new concept has emerged - 'BTC Yield.'

MicroStrategy introduced this unusual term to investors in August. For those unfamiliar, 'BTC' refers to Bitcoin, while 'yield' is the ratio of the return on investment to the principal investment.

However, 'BTC Yield' is not that simple. As the company introduced, it is the percentage change in the number of Bitcoins owned by MicroStrategy per share between two dates.

Since the beginning of this year, the company's stock price has soared 650%, far exceeding the price increase of Bitcoin. If the price of Bitcoin falls, MicroStrategy will suffer a fatal blow. Whether 'BTC Yield' can withstand the test of the market remains to be seen.

'BTC Yield': A brand new concept

MicroStrategy uses 'BTC Yield' as an indicator to measure its Bitcoin acquisition strategy. MicroStrategy explained in the document that the concept of BTC Yield refers to the percentage change in the number of Bitcoins owned by the company per share between two dates.

Specifically, as of November 17, assuming all of the company's convertible debt has been converted into shares, each 1,000 shares of outstanding stock would own 1.29 Bitcoins. This ratio has increased by 41.8% compared to December 31 of last year, when each 1,000 shares owned only 0.91 Bitcoins. MicroStrategy refers to this 41.8% growth as 'year-to-date BTC yield.'

This yield can be calculated over different time periods, such as quarterly or year-on-year, or by comparing any two dates with data.

Recently, BTC Yield has shown a rapid upward trend. Just a week ago, MicroStrategy announced in a press release that 'year-to-date BTC yield has reached 26.4%', a significant increase from 17.8% on September 30.

When MicroStrategy first used BTC Yield as a key performance indicator, the company ambitiously stated that starting next year, they would strive to raise this indicator to a range of 4% to 8%.

If the price of Bitcoin falls, MicroStrategy's stock price will suffer a fatal blow.

Since 2020, MicroStrategy has turned its attention to Bitcoin, with the company's co-founder and executive chairman Michael Saylor becoming a fervent supporter of Bitcoin and launching large-scale purchases.

In order to continuously increase its Bitcoin holdings, the company has not hesitated to keep selling shares to cash out. The value of Bitcoin held by MicroStrategy is nearly four times that of the total of ordinary investors.

Last month, MicroStrategy once again announced that it would raise $42 billion over the next three years for large-scale purchases of Bitcoin.

However, the cycle of 'selling stocks and buying Bitcoin', while boosting the company's stock price, also faces huge market risks. According to the latest data, the company holds 331,200 Bitcoins, with a market value of up to $31.2 billion.

MicroStrategy's stock price has seen a more astonishing increase, soaring 650% this year, far exceeding the price increase of Bitcoin. This reflects investors' fervent pursuit of the company's Bitcoin investment strategy.

This strategy of 'betting' on Bitcoin has raised concerns in the market. Analysts point out that MicroStrategy's software business is not particularly outstanding, and its high corporate debt also increases financial risk. If the price of Bitcoin falls, the company's stock price will suffer a fatal blow.

(The Wall Street Journal) reporter Jonathan Weil stated:

'If you are optimistic about the future of Bitcoin, directly purchasing Bitcoin may be a more effective choice. Although your judgment on market trends may not be more accurate than others, at least you can directly participate in the market.

Choosing to invest in MicroStrategy is betting on an inefficient market, thus becoming even less efficient.'

This article is from The Wall Street Journal, welcome to download the APP for more.

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