Author: 0xTodd
First of all, let's be excited that our beloved Bitcoin has reached 98,000 dollars!
Undoubtedly, the contributors to the 40K-70K range are Bitcoin's ETFs, and the contributors to the 70K-100K range belong to MicroStrategy.
Many people now liken MicroStrategy to the BTC version of Luna, which makes me a bit uncomfortable, because Bitcoin is my favorite cryptocurrency, while Luna happens to be my least favorite cryptocurrency.
I hope this post helps everyone better understand the relationship between MicroStrategy and Bitcoin.
First, several conclusions are stated at the beginning:
MicroStrategy is not Luna; its safety cushion is much thicker.
MicroStrategy increases its Bitcoin holdings through bonds and stock sales.
MicroStrategy's recent debt repayment date is in 2027, which is more than 2 years away from us.
MicroStrategy's only soft threat is Bitcoin whales.
MicroStrategy is not Luna; it has a much thicker safety cushion than Luna.
MSTR net worth vs Bitcoin price
MicroStrategy was originally a software company with a lot of unrealized profits, and not wanting to invest in production anymore, it began to shift from real to virtual, starting in 2020 by buying Bitcoin out of its own pocket.
Later, MicroStrategy bought all the money on its books and began to leverage. Its way of leveraging is through over-the-counter leverage, determined to borrow money to buy Bitcoin through issuing corporate bonds.
Its essential difference from Luna is that Luna and UST are printed mutually; essentially, UST is meaningless unanchored printing, relying entirely on 20% false interest to barely maintain itself.
But MicroStrategy is essentially bottom-fishing + leverage, which is standard borrowing to go long, and its direction is correct.
The popularity of Bitcoin far exceeds that of UST, while MicroStrategy's impact on Bitcoin is significantly lower than that of Luna on UST. It's a simple principle; a daily rate of 2% is a Ponzi scheme, while an annual rate of 2% is a bank. Quantitative changes cause qualitative changes, and MicroStrategy is not the only factor determining Bitcoin, so MicroStrategy is definitely not Luna.
MicroStrategy increases its Bitcoin holdings through bonds and stock sales.
In order to quickly raise funds, MicroStrategy has issued multiple debts amounting to 5.7 billion dollars (for everyone's intuitive understanding, this is equivalent to 1/15 of Microsoft's debt).
And almost all of this money is used to continuously increase Bitcoin positions.
Everyone has used on-exchange leverage; you need to use Bitcoin as a deposit, and the exchange (as well as other users in the exchange) will lend you money. But over-the-counter leverage is different.
All creditors in the world only worry about one thing: not being repaid. Without collateral, why are people willing to lend money to MicroStrategy over-the-counter?
MicroStrategy's bond issuance is interesting; over the past few years, it has issued a type of convertible bond.
This convertible bond is very interesting; let me give an example:
Bondholders have the right to convert their bonds into MSTR stock, divided into two stages:
1. Initial stage:
If the trading price of the bond drops >2%, creditors can exercise their rights, converting the bonds into MSTR shares and selling them to recover their capital.
If the trading price of the bond is normal or even rises, creditors can sell the bond in the secondary market to recover their capital at any time.
2. Later stage: When the bonds are about to mature, the 2% rule no longer applies; bondholders can take cash and leave, or directly convert the bonds into MSTR stock.
Let's analyze this again; it is generally a risk-free business for creditors.
If Bitcoin drops and MSTR has money, creditors can get back cash.
If Bitcoin drops and MSTR has no money, creditors still have a final safety net, which is to convert it into stock to cash out.
If Bitcoin rises, MSTR will rise, and creditors can give up cash for more stock returns.
In short, this is a trade with a high lower limit and a very high upper limit, so naturally, MicroStrategy successfully raised money.
Fortunately, no, should I say loyally, MicroStrategy chose Bitcoin.
Bitcoin did not let it down either.
2024 MicroStrategy stock price trend
As Bitcoin continues to soar, the Bitcoin that MicroStrategy accumulated early on is also rising in value. According to the old and classic stock principle, the more assets a company has, the higher its market value should be.
Therefore, MicroStrategy's stock price has also skyrocketed.
MicroStrategy's daily trading volume has now surpassed this year's absolute dark horse Nvidia. Thus, MicroStrategy now has more choices.
Now MicroStrategy not only relies on issuing bonds but can also directly issue additional stocks for sale to raise money.
Unlike many meme coins or Bitcoin developers who do not have minting authority, traditional companies can issue additional stocks after following relevant processes.
Last week, Bitcoin was able to rise from just over 80K to the current 98K, thanks to MicroStrategy's support. Indeed, MicroStrategy issued additional stocks, selling them for 4.6 billion dollars.
PS: Companies with trading volumes exceeding Nvidia naturally possess this liquidity.
Sometimes, you admire a company for making great profits, which requires respecting its great courage.
Unlike many cryptocurrency companies that sell off for cash, MicroStrategy's pattern is as grand as ever. MicroStrategy reinvested all the money obtained from selling stocks back into Bitcoin, pushing Bitcoin towards 98K.
Up to this point, you should have understood MicroStrategy's magic:
Buy Bitcoin → Stock price rises → Borrow to buy more Bitcoin → Bitcoin rises → Stock price further rises → Borrow more debt → Buy more Bitcoin → Stock price continues to rise → Issue more stocks for sale to raise money → Buy more Bitcoin → Stock price continues to rise...
Presented by the great magician MicroStrategy.
MicroStrategy's recent debt repayment date is in 2027, we still have at least 3 years.
As long as there is a magician, there will be a time to expose the magic.
Many MSTR shorts believe that we have already reached the standard left side, even suspecting that it has reached the Luna moment.
However, is the fact really so?
According to recent statistics, MicroStrategy's average cost for Bitcoin is 49,874 dollars, meaning it is currently close to a profit margin of 100%, which is a super thick safety cushion.
Let's assume the worst-case scenario; even if Bitcoin drops 75% (which is almost impossible) to 25,000, what would happen?
MicroStrategy borrows through over-the-counter leverage, with no liquidation mechanism at all. Angry creditors can at most convert their bonds into MSTR stock at a specified time and then angrily dump it into the market.
Even if MSTR is smashed to zero, it still does not need to be forced to sell these Bitcoins because the earliest debt MicroStrategy borrowed needs to be repaid by - astonishingly - February 2027.
You have to see clearly, this is not 2025, nor 2026, but Tom's 2027.
In other words, we have to wait until February 2027, and Bitcoin would have to crash for MicroStrategy to sell a portion of its Bitcoins only if no one wants MicroStrategy's stock anymore.
Counting all of it, there are still more than 2 years left to keep playing music and dancing.
This is the magic of over-the-counter leverage.
You might ask, could MicroStrategy be forced to sell Bitcoin due to interest?
The answer is still negative.
Due to MicroStrategy's convertible bonds, creditors are generally guaranteed to make a profit, so its interest rates are quite low. For example, the one due in February 2027 has an interest rate of 0%.
Creditors are purely interested in MSTR's stock.
And the interest on the subsequent debts it issued is also at 0.625%, 0.825%, with only one being 2.25%, which has a very small impact, so there is no need to worry about its interest.
The main bond interest of MicroStrategy, source: bitmex
MicroStrategy's only soft threat is the Bitcoin whales.
At this point, MicroStrategy and Bitcoin have become mutually causal.
More companies are preparing to start learning - the great operation of Bitcoin's David Copperfield (Saylor).
For example, a listed Bitcoin mining company MARA has just issued 1 billion dollars in convertible bonds specifically to prepare for bottom fishing.
So I think shorts should be cautious; if more people start to imitate MicroStrategy, the momentum of Bitcoin will run wild, after all, the upper levels are all vacuum.
So, now MicroStrategy's biggest competitors are only those ancient Bitcoin whales.
As many people predicted before, retail investors have already given away all their Bitcoin, after all, there are just too many opportunities, like the meme trend; I just don't believe everyone is empty-handed.
Thus, only these whales remain in the market; as long as they do not move, this momentum is hard to stop. If we are a bit luckier, and the whales form some subtle tacit understanding with MicroStrategy, it is enough to push Bitcoin toward a greater future.
This is also a major difference between Bitcoin and Ethereum: Satoshi theoretically owns nearly 1 million early-mined Bitcoins, yet has been silent until now; while for some reason, the Ethereum Foundation sometimes really wants to sell 100 ETH to test liquidity.
As of the date of writing today, MicroStrategy has already achieved an unrealized profit of 15 billion dollars, relying on loyalty and faith.
Because it is making money, it will increase its investment; it can no longer turn back, and more people will imitate it. According to the current momentum, 170K is the mid-term target for Bitcoin (not financial advice).
Of course, we are used to seeing conspiracy groups in memes every day; occasionally seeing a real top-level conspiracy is genuinely impressive.
