MicroStrategy founder Michael Saylor says the company’s ultimate goal is to become the leading Bitcoin bank — eventually growing into a multi-trillion dollar company.

(MicroStrategy rebrands as "Bitcoin Development Company", buying BTC is not as good as buying MicroStrategy stocks)

MicroStrategy is Creating Bitcoin Capital Markets Instruments

MicroStrategy has been actively buying Bitcoin since 2020, leveraging debt and equity to maximize returns and outperform many traditional investments. The company issued debt again in September and bought 7,420 bitcoins. The number of bitcoins it holds reached 252,220, equivalent to 1.2% of the total supply of bitcoins. It is the world's largest listed company holding bitcoins.

According to The Block, a recent report issued by Gautam Chhugani, head of digital assets at Bernstein, pointed out that Saylor, the founder of MicroStrategy, likened the company to a Bitcoin bank or a Bitcoin financial company. Its core business is to create a convertible currency that covers stocks. Bitcoin Capital Markets Instruments for Bonds, Fixed Income and Preferred Equity.

The company's strategy is based on its long-term belief in Bitcoin as the best deflationary currency. Chhugani explained that Bitcoin currently accounts for only 0.1% of global financial capital, and Michael Saylor predicts that this proportion will rise to 7%, which means that by 2045, the price of each Bitcoin will reach $13 million.

Bernstein analysts said that if the U.S. capital market allows MicroStrategy to raise funds through debt, equity and other instruments, it will be happy to expand and arbitrage between the U.S. capital market and Bitcoin. In the basic scenario estimated by Saylor, Bitcoin It will grow by 29% every year.

When asked about the scalability of the company's debt strategy, Saylor said:

I think it's infinitely scalable, we can raise another $100 billion, we can raise another $200 billion, that's not a problem. This will be a trillion dollar asset class and then move up to ten trillion, hundreds of trillions of dollars. The risk is simple – it’s Bitcoin. You either believe in Bitcoin or you think it’s nothing.

Bitcoin bank that lends money to buy Bitcoin

Chhugani also pointed to Saylor’s view that Bitcoin’s potential average annual growth rate is attractive enough to continue making money through capital market arbitrage. Because traditional banks lend funds to individuals, individuals, businesses and governments, he believes this is riskier than "providing loans to Bitcoin" (referring to investing in Bitcoin).

We think a better idea would be to borrow $10 billion from those eager to lend, give them an extra 1%, and then lend it in Bitcoin at 30% to 50% interest, with no counterparty risk.

Once you get past the volatility and learn how to manage it, my most pessimistic scenario is that Bitcoin will only grow 22% per year over the next decade. Let me ask, who is willing to pay you 22% annual interest rate?

MicroStrategy’s recent gains far outperform those of Bitcoin

MicroStrategy started buying Bitcoin in September 2020. Based on this, during the starting period, we compared the stock price of MicroStrategy (blue line) and the price of Bitcoin (red line) in the following table. Its stock price is highly correlated with the price of Bitcoin. , but the stock price of Micro Strategy has clearly outperformed Bitcoin recently. Since its purchase, the stock has gained 1,395%, compared with Bitcoin’s performance of 510% over the same period.

MicroStrategy has gained 207% so far this year, surpassing AI company NVIDIA's 173% gain.

This article MicroStrategy’s Endgame to Become a Trillion Dollar Bitcoin Bank first appeared on Chain News ABMedia.