The post Is MicroStrategy’s Premium Pricing Hurting Bitcoin Investors? appeared first on Coinpedia Fintech News
MicroStrategy is generally regarded as a leveraged Bitcoin play or a synthetic call option. However, crypto expert Alex Kolicich reveals why MSTR may not be the best way to gain Bitcoin exposure. Let’s understand his insights!
Prime Misconception About MSTR
The price of MSTR remains at $386.42. In the last 30 days, the market has experienced a surge of over 10.96%.
Portraying MicroStrategy as an overpriced entry point into Bitcoin, Alex argues that it trades at a 140% premium to its NAV.
There is so much misinformation out there about $MSTRIt isn’t a “synthetic call” on bitcoin, nor is it even a leveraged way of buying Bitcoin.It’s a poorly structured, tax-inefficient fund that trades at a 140% premium to NAVA thread:
— Alex Kolicich (@AlexKolicich) December 16, 2024
Bitcoin Exposure and Pricing Issues
MicroStrategy holds at least 439,002 BTC, worth at least $45,782,223,524, which is around 2.09% of the total supply of Bitcoin. This translates to around $177.60 in NAV per share of Bitcoin. The crypto expert notes that the MicoStrategy market provides less than $0.45 in Bitcoin exposure for every $1 spent on it. He criticises that instead of offering more exposure, MicroStrategy offers less Bitcoin exposure than buying BTC directly.
MicroStrategy Is Not Leveraged or Long Volatility
The expert points out that when MSTR issues convertible debt, it effectively shorts volatility by selling a bond and a call option. He adds that unlike call options, MicroStrategy does not provide leverage on invested dollars.
Shareholder Dilution
Alex emphasises that rising BTC prices trigger convertible debt, resulting in dilution of the Bitcoin exposure of the shareholders of MicroStrategy.
Structural Issues with MicroStrategy
Emphasising the fact that MicroStrategy is a C-Corp, and explaining how the structure of MSTR is different from ETFs, the crypto expert points out that the gains of a C-Corp are generally subject to double taxation (corporate and personal taxes).
Better Alternatives for Bitcoin Exposure
Projecting BITX as a more efficient and cost-effective alternative to MSTR, the expert claims that products like BITX offer 2x leveraged Bitcoin exposure without trading at a premium to NAV.
In conclusion, investors should critically evaluate MSTR before jumping in. With its tax inefficiency, premium pricing, and limited Bitcoin exposure, better alternatives like BITX might offer smarter and more profitable ways to invest in BTC.
