CoinVoice has recently learned that Interactive Brokers' Chief Strategist Steve Sosnick pointed out last week that MicroStrategy's Michael Saylor's strategy is to issue convertible bonds and use the proceeds to buy Bitcoin, which is essentially the definition of leveraged trading — borrowing money to purchase financial assets.
This approach works very well when the price of the asset moves in your favor, and Bitcoin has performed quite well. But if it moves in the opposite direction, this method can collapse in a nasty way. Steve Sosnick emphasized that MicroStrategy benefits from a 'self-fulfilling feedback loop.'
It bought more Bitcoin, helping to drive up the price, then sold more debt and stock to buy more Bitcoin, further pushing up the price. But such things can never last forever, and they often end badly — the question is when? The short-term answer seems to be not anytime soon. [Original link]
