There is a lot of confusion surrounding Michael Saylor's Bitcoin strategy.

Let me explain to you exactly what is happening.

This could be one of the best investments of your life 👇

In itself, this is not particularly unique: many people use debt to buy assets.

However, since it is a publicly traded company, it can use its equity as collateral on this debt.

This allows them to borrow at extremely low interest rates.

If you look at their different bond tranches, their interest rates range from 0.875% to 1.76%.

With the debt they have accumulated, they pay less than $75 million in annual interest.

If we look at Bitcoin's annual returns since MicroStrategy adopted this approach


$BTC generates an annual return of 55% (as of 2020)

This means that $MSTR pays 0.875%-1.76% to buy an asset that increases by 55%.

Okay
 the returns are phenomenal, but that’s not all.

Thanks to MicroStrategy's Bitcoin reserves and leverage, their shares are trading at a high price.

With this bonus, they can sell shares to buy even more Bitcoin.

This means that shareholders now own a smaller percentage of the company.

But their Bitcoin holdings per share are increasing.

This temporarily decouples $MSTR from its Bitcoin premium until the free market restores it.

At this point, MicroStrategy can repeat the process again.

This is dubbed the “infinite money problem.”

Now that you understand what's happening...

Let’s discuss the 6 assumptions people make about this strategy 👇

1/ “What if MicroStrategy couldn’t pay the $75 million in annual interest on its bonds?”

MicroStrategy is not just a holding company for Bitcoin.

It is a software company with legitimate offerings that generate around $400 million per year in revenue.

This more than covers its interest payments.

2/ “What if the Fed raised rates and interest payments increased?”

MicroStrategy purchased fixed interest rate bonds.

However, the value of these bonds would decrease if rates were increased.

Regardless, MicroStrategy will continue to pay its cheap and predictable interest.

3/ “MicroStrategy stores its bitcoins at Coinbase. What if $COIN goes bankrupt?”

MicroStrategy stores its coins at Fidelity and Coinbase.

$MSTR likely has joint custody and holds the multisig keys.

The concept of “not your keys, not your coins” does not apply here.

DISCLAIMER: It has never been confirmed whether or not MicroStrategy holds the multisig keys.

However, it is VERY common for institutional investors to implement multisig in this situation.

4/ “Won’t MicroStrategy’s premiums erode when mega-cap companies adopt this strategy?”

Copycats will only cause the price of Bitcoin to skyrocket.

Saylor has the advantage of being the first to get involved, and it is probably impossible to catch up.

Bitcoin's inelastic supply gives it a sort of digital monopoly.

5/ “Isn’t there a risk that MicroStrategy’s premium will disappear or even reverse in the event of a bear market?”

Yes
the company and its investors will probably have to wait for the next bull market.

Investing in $MSTR should be a long term value for this exact reason.

6/ “MSTR cannot maintain this premium above its net tangible assets.”

Objectively false. Companies like Microsoft trade at a 50x premium to their assets.

All mega-cap companies have insane premiums above their reserves.

MicroStrategy's premium is rather low.

So what do you think of Saylor's strategy? Pretty brilliant.

I would like to know your opinion on the situation.

If you have any objecobject , let's switch to them below.

$BNB $SOL

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