Michael Saylor's MicroStrategy was one of the companies that suffered the most severe declines and market value losses during the 2000 Internet crash. His own fortune also suffered a severe decline when the bubble burst.
Now, MicroStrategy's main business is online data analysis and AI, and the official website interface is still at the level of a traditional Internet ToB enterprise, except that the company holds a large amount of BTC, in my personal opinion, there are almost no products or technologies that are enough to support MicroStrategy's current market value of more than 20 billion US dollars...
So we can roughly understand that micro strategy stocks are a company “ETF” based on the price of BTC.
However, if calculated at the current price of $63,000, the market value of these BTC is only $15.89 billion, while the market value of its shares exceeds $20 billion.
Meanwhile, MicroStrategy is said to still have 2,000 employees. I'm curious, if the company's value comes from BTC, where does the cost of these employees come from? After all, MicroStrategy's self-run business seems to be losing money.
This led to a widely rumored "new Ponzi scheme" on the Internet, namely the "reverse Ponzi scheme".
The traditional Ponzi scheme relies on the participation of a large number of new users to pay interest to a small number of old users, thus forming a pyramid-like fraudulent structure; while the "reverse Ponzi scheme" relies on both new and old users; Attracting external investment or loans to increase the market value of the overall capital market is a structure similar to the "sticky method", that is, the internal circulation model of "stomping left and right, going up in a spiral". ".
Let's see if the microstrategy's behavior is consistent? First of all, MicroStrategy has been consistently buying BTC since the beginning of 2020. The most recent purchase actually took place on 9-13. It currently holds 252,220 BTC, at an average price of around $38,585.
The money to buy BTC does not come from the company's deposits but is raised from the market through a method similar to convertible bonds. Borrowers can receive micro-strategic shares at the same quantity or negotiated price.
Simply put, the micro strategy of selling one's own shares and using the money to exchange for BTC, due to the purchase of BTC, the company's stock price has become increasingly highly correlated with the price of BTC since 2020, especially recently. Almost the same price trend has been achieved in half a year.
From the investor or borrower perspective, this is equivalent to buying the equivalent amount of BTC, so if there is any risk, the risk is only limited to the price fluctuations of BTC and the whole process is completely legal. But is this really the case?
An investigation was conducted and the results were as follows:
More than 80% of people think this is a scam...
So I'm also wondering how this behavior of putting a large amount of BTC on a company's balance sheet will eventually end up?
The first problem is: the gap between capital inflows and asset valuations.
Suppose the micro strategy raises $2 billion from the market to buy BTC. After the purchase, the company's stock price and BTC both increase. When converted, the income behind the micro strategy actually doubles. only hold BTC Or if you only hold the micro strategy stocks, the price increase can only bring a 1:1 return. For the micro strategy, you can get 2 profits from the currency price increase plus the stock price increase, that is. , the return ratio is 1:2.
From the perspective of investors or borrowers, it is actually equivalent to buying BTC on the spot and reaping the benefits, but for the micro strategy, the currency is in your hands, the stock price is still rising, and the assets on the books are doubling as fast as before. Not to mention, there are operational possibilities behind the act of lending and pledging stocks.
Second Question: BTC Cannot Be Issued Additional, But Stocks Can...
As long as you continue to buy BTC to ensure that the market believes that the price of micro-strategy stocks will always follow BTC, then even if the stock price is slightly lower than BTC, a large amount of arbitrage funds will enter the market to correct this short-term negative premium. The specific operation is to sell BTC and buy stocks at the same time, you can close the position and make a profit after the price difference recovers (but I think this operation is really difficult to do. ).
But this alone should explain why micro strategy stock prices are so aligned with BTC prices.
Going back to MicroStrategy shares, is there a limit to the total number of shares issued? Could MicroStrategy split its stock or issue additional shares in the future?
If the answer is yes, then there is clearly room for arbitrage here; using assets that appear to be equivalent to BTC to exchange for real BTC, even if BTC drops sharply or stocks drop sharply in the future, investors will sell when they exit the market. market loss It's a stock, but no need to sell BTC with a micro strategy?
If BTC price drops below 38,500, will the stock price have a large negative premium to BTC? That is, will investors or borrowers suffer losses that far exceed the losses caused by the decline in BTC?
I haven't thought clearly about this, but from a logical analysis, the micro strategy model may not be a scam in the strict sense but more like a means of transferring risk to the borrower or investor.
For Michael Saylor, if BTC continues its bullish trend, he will soon become the richest person in the world. If BTC drops and plummets below 38,500, he will still be the person or entity with the most BTC in the world besides Satoshi. Nakamoto, either way, that is a win.
Unless he is willing to sell BTC to buy back stocks to stabilize the price difference when the stock price reaches negative compensation, causing BTC and stocks to fall further, his model could theoretically continue forever.
