MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

[oHnK]

To summarise, if bitcoin grows in value in the next few years, the amount of bitcoin they will have to sell to repay their debt is going to be only a tiny fraction of the amount of bitcoin they bought, being their debt dollar denominated.
If you think, it's the exact same scheme people were using in 2007 with housing markets: "buy a house with debt, use the house selling price to repay the debt cashing in the difference, rinse and repeat in bigger size".

The thought is scary and got me thinking of reasons why this parallel shouldn't be drawn. I'll posit that underlying assumption of The Housing Bubble was that House prices always go up. While a lot of Bitcoin enthusiasts love to have similar notions, most market participants understand that this assumption is not correct. They are mostly ready to manage their positions at the first sign of trouble. This is because Bitcoin is a far more liquid asset than housing.

Additionally, those in a position to take on debt based on Bitcoin positions are only a very few, maybe just corporations and not necessarily individual buyers as in the case of housing. Within the decentralized Lending scenario, where this is a thing on individual scale, the BTC is often over-collateralized or simply locked for a very small interest rate.

So yeah, thankfully, the similarities are few.

I want to join in this discussion, firstly I sure that MSTR management have their good strategy on their bond.  Yup, Bitcoin and House is the different kind of investment based on the liquidity, but here althought I sure that my ability to analyze their strategy is still need to be questioned, what is their next strategy if the asset value on their obligation is down and  even they are loss because their asset value is lower than their leverage.  Is it true if my mind think that they will use the next strategy such as sell their new bond to pay coupon of their previous bond?

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[JayJuanGee]

By the way, this post is not meant as a personal attack, even though i use strong language.. I am talking about the ideas contained in your post, not you specifically.

I take no offense; I'm no expert in economics or hedging, so opposing viewpoints are welcome (at least for me).

I just saw a link to this WSJ article about bitcoin (it's behind a paywall unfortunately), which mentions that MSTR is selling bonds in order to buy bitcoin.  They're actually taking on debt in order to increase their bitcoin holdings, which I find to be incredible.  Again, I have no clue what their shareholders think about this, but it's a massively ballsy move to do that--that CEO is obviously so bullish on bitcoin that he's betting on it going up much more than whatever interest those bonds pay.  And man, for his sake I hope he's right.  If bitcoin were to suddenly tank, I'm pretty sure there would be some kind of shareholder revolt.

I mean it's a pretty safe bet as long as they have cash flow to pay the interest. I think the interest rate was set at 6.xx%. And bitcoin on average goes up by 100+% a year the past 5 years, and considering it just dropped 50% it's a great time to do this sort of thing. Apparently there was like $1.5 billion trying to buy in, but Saylor limited it to $500 million in order to be able to handle the interest payments.

I do note that the last time they raised money for buying Bitcoin there was literally no interest paid out on it. I think Saylor is probably getting close to the end of his Bitcoin buying sprees if they went from paying no interest to paying 6+% on this one. They've got the $1 billion equity sale over time that they filed for which they plan to use partially for Bitcoin buying as well. I wouldn't be surprised if some of that equity sale will be used to have an emergency fund of cash to cover interest payments so they don't have to sell any of their Bitcoin and let their balance sheet just keep ballooning. I'm guessing that'll be the last of their big bitcoin accumulation buys, though I'm sure they'll keep DCAing $10-$15 million at a time.

Is it publicly known how much Bitcoin or cryptocurrencies in general they are holding in total?

You can read this thread and find out.

They have 92k BTC and they have authorization to buy BTC with another $500 million (whether they have bought yet or not is still not clear)

They ONLY buy and hold bitcoin, so fuck off with your asking about cryptocurrencies, they do not buy shitcoins... hahahaha.. nothing personal against you, fulcare.   

I just know they've been constantly on the news for buying. Since when are they buying?

Michael Saylor (and thus MSTR) is a newbie to bitcoin, so again you might want to study this thread in regards to the situation, and surely he is an interesting case in terms how quickly he studied the matter, how BIG he went in from the start in August 2020.., how much publicity he has been getting, some of his ongoing doubling down in terms of his buying of bitcoin and how much he seems to be ready, willing and able to share his strategies including giving free seminars on the topic of how to buy BTC (and put BTC on the treasury balance sheets) for BIGGER players.

Have they been early adopters?

Of course, "early adopter" is a relative term, so how the hell is anyone going to know for sure except with the passage of time in regards to how matters turn out.

Of course, the theory is that we remain in relative early stages, and so MSTR seems to be of this mindset in terms of considering how advantaged that they could become to attempt to front run BTC investing and in that regard to have a lot of advantages over other players who are either too slow to act or too non committed in terms of recognizing BTC's current value proposition.

It is just impressive to see how bullish they are and how they repeatedly say that this is still the early stage of crypto.

They might be correct, and they might not.  Surely, many regular bitcoiners believe that they are both right and quite smart to be attacking the matter quite aggressively in such a short period of time.  With the passage of time, we will see how well their aggressive approach works out for them.

They are probably right given the astonishing pace of innovation we have seen so far and we can still expect to continue throughout the future.

Seems that they are probably right, so then anyone studying the situation, whether an individual or an institution has to decide if the behaviors of MSTR is going to affect their own thinking about the matter.  If MSTR is trying to buy all the bitcoins, then there might be some considerations about whether to emulate or just step back and let them buy them all or take some moderated stance to accumulate a sufficient amount of BTC in order to feel comfortable with the possibility that they could be right  - or on the other hand, be prepared in case they might not be correct...

I would imagine that quite a large number of regular forum members have been preparing for BTC prices to go up for some time, so the behavior of MSTR is not totally shocking, even if it seems to be way more aggressive than even the most bullish of bullish members here.... Many times regular peeps do not have cashflows that are great like MSTR nor are they in a position to either leverage a company or to gain publicity for such leverage, so in that sense the behavior of MSTR ends up fitting in a special category that might not be the same as what longer term forum members had been capable of doing, but there likely are a decent number of longer term forum members who feel adequately prepared psychologically and financially for MSTR's seeming ongoingly aggressive approach to BTC.

whether they really buy or just a Fud that makes BTC price go up for them to profit, when they bought a bunch of BTC when it Dumped to $ 30k recently.

You are speaking gobble-dee-gook like some kind of butt hurt no coiner who doesn't know shit but wants to spout out some kind of out of touch theory.

I will admit that the behavior of Microstrategies fits into a kind of difficult to believe category, but if we are attempting to categorize the behavior and talk about the BTC price effects that it may have, we should be attempting to stick with reality rather than just making up shit that makes hardly any sense.

Another matter is that it seems to be difficult to know whether MSTR bitcoin buying is having much if any affect on short term BTC price.  Of course, any entity that continues to buy is going to put ongoing pressures on the buy price, but if others do not follow or if the selling (or even the use of financial instruments to short) are stronger than the buying pressures, then of course the BTC price will continue to go down, even if Saylor et al might be buying BTC in lump sums and even 10s of millions of dollars worth regularly on a monthly or so basis.

I would not proclaim to know whether $30,066 is our actual bottom for this particular correction or if there might be more room for more downity.  Looks like we are getting another test of buy support, and sure it is possible that MSTR has already bought.. but really difficult to know, especially if they have not yet announced.  At some point, I would consider that Saylor/MSTR would want to be a bit more strategic about their buys in terms of buying on dips - because at some point they must appreciate that they are HODLing a sufficient amount of BTC to prepare for UP... so in some senses they can help the whole ecosystem and themselves to be buying on dips, too... rather than just buying at whatever the BTC price happens to be at the time - which is what is recommended for a smaller HODLer who is still establishing base BTC accumulation levels - and so it should be logically apparent that even having had accumulated 92k coins or even perhaps over 100k coins by now, MSTR has accumulated a pretty decent base of coins relative to other assets that they might hold or even some cash that they may continue to have available besides the cash that they have borrowed, equity that they have reserved or other cash that might be coming in based on ongoing sales (that are likely to be continuing).

[Spack17]

I hope that they are really candid about cryptocurrencies. Because I know of course that the main goal of nearly every company is making a lot of profit in Bitcoin. They are making statements like this to have an effect on the market and the prices as well.

[fillippone]

Microstrategy finally released their statement about the BTC purchased following las debt issuance:


https://twitter.com/michael_saylor/status/1406946140344442882?s=21

From the press release:

MicroStrategy Acquires Additional Bitcoins and Now Holds Over 105,000 Bitcoins in Total
Press Release | June 21, 2021

TYSONS CORNER, Va., June 21, 2021-- MicroStrategy® Incorporated (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced that it had purchased an additional approximately 13,005 bitcoins for approximately $489 million in cash at an average price of approximately $37,617 per bitcoin, inclusive of fees and expenses.

As of June 21, 2021, MicroStrategy holds an aggregate of approximately 105,085 bitcoins, which were acquired at an aggregate purchase price of approximately $2.741 billion and an average purchase price of approximately $26,080 per bitcoin, inclusive of fees and expenses. MacroStrategy LLC, a subsidiary of MicroStrategy, holds approximately 92,079 of the bitcoins.

Here's the full Portfolio


Coloured bands mean these purchases are tied to corresponding debt issuance.

[Upgrade00]

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Just saw the update on Twitter. I dare say this is one of their best buy in prices in a long time, although the purchasing price doesn't seem to matter to Michael Saylor, as long as they are purchasing more and building up their stash.

At this rate, microstrategy are tilting more towards a Bitcoin oriented company than any of the other services they offer.

[cheezcarls]

Looks like MicroStrategy is taking advantage of the recent dip in order to bag and accumulate more BTCs. If you are a buyer who is longing for a discount, this is a great opportunity right now. However, it's still too far to say that crypto is "superior" to cash. Fiat is still dominating at this point and crypto is just still "young", so maybe give it decades.

[fillippone]

At this rate, microstrategy are tilting more towards a Bitcoin oriented company than any of the other services they offer.

They currently are a 60% BTC company:



They are a 60% BTC company, they now basically are common people BTC ETF. I have already stated this is nut, imho.

[Upgrade00]

For many, including me, this is an inspiring sign that they continue to believe in bitcoin and continue to accumulate it, and do not follow the path either Musk or Ruffer Investments, who abandoned bitcoin a few months later.

It is a good sign, that the company is more focused on accumulating more, but I do not think that should be used as a motivation for other Bitcoin holders, giving too much respect to any individual or company is not healthy as they could switch up anytime and with their influence affect the market, similar to how people looked up to Elon Musk before his switch to remove Bitcoin as a payment option.

They are a 60% BTC company, they now basically are common people BTC ETF. I have already stated this is nut, imho.

Basically, that's an outrageously high amount; pretty soon, Bitcoin price movements would affect their stock price more than any other factor.

[JayJuanGee]

Looks like MicroStrategy is taking advantage of the recent dip in order to bag and accumulate more BTCs. If you are a buyer who is longing for a discount, this is a great opportunity right now. However, it's still too far to say that crypto is "superior" to cash. Fiat is still dominating at this point and crypto is just still "young", so maybe give it decades.

I doubt that many of us give too many shits about "crypto" in this thread, including MSTR is focused exclusively on BTC... so it probably is not good to be muddying the description by using nonsense terms like "crypto" in terms of what the motivations of MSTR are regarding the ongoing and even seemingly excessive (relatively speaking) accumulation of more bitcoin.

We can agree or not, but it seems quite apparent that the exact bet that MSTR is making is that bitcoin is superior to cash, especially in recent times when it appears that there is hardly a chance in hell that cash will be even able to hold it's face value even if you were to attempt to put it into some kind of income generating instrument, from MSTR's point of view there seems to almost no way that anyone would be able to hold onto cash and to be able to allow it to even maintain its value.. so in that sense, MSTR is making a speculative bet that bitcoin is better than cash in terms of holding and storing value, and the fact that MSTR is more than willing to employ various kinds of debt instruments, they are concluding (or speculating) that BTC is going to outperform cash, even if they have to pay some servicing fees on top of the cash that they are getting through such debt instruments.

I agree with Ratimov that we should NOT be taking the holding for a century proclamations seriously because any company will need to assess and reassess their situation from time to time, and surely with MSTR a central point of failure is the mortality of Saylor.. and we should know damned well that he is not living more than 50 years, at best.

Surely the long term HODL of MSTR is likely that they are not giving too many shits about buying at any prive because they are considering the more immediate 4-7 years are going to play out quite well in terms of their debts coming due and any amounts of BTC that they accumulate today - even with what many of us consider to be large price swings, MSTR seems to be a bit less concerned about current price swings in terms of timing their ongoing BTC purchases.

Of course, the dollar still has way more liquidity than bitcoin, so that does give a considerable amount of current value to the dollar - and it had a lot of value in March 2020 when there were a lot of people/business who seemed to be unable to get enough dollars - but the outrageous reaction to print exorbitant amounts of dollars might have been amongst seemingly reasonable reactions, many people are going to recognize that there are quite likely to be costs down the road.. including potential instability and all of a sudden gambling kinds of costs to be holding onto something that you might perceive to be so valuable, BIG and uninvincible in the short to medium term, and then all of a sudden confidence could disappear.. but we do not even need to rely on those kinds of dire situations to see the ongoing diluting dynamics that are already in existence to make the dollar less valuable, even if it still remains amongst the most liquid of assets (currencies).

Hopefully, you cheezcarls are not getting so focused on short term happenings or even ideas that the status quo is working so damned well that you cannot appreciate value that is actually coming from such a young asset, such as bitcoin (only 12.5 years old).. and by the way, fuck crypto currencies, because that "crypto" categorization or way of thinking about the matter at hand is NOT going to help any of us in seeing, appreciating and recognizing what is going on in current times as well as if you happen to understand what bitcoin is bringing to the table of valuable and sound money, even if it happens to be a relatively (or would be say "quite"?) young asset class.

They are a 60% BTC company, they now basically are common people BTC ETF. I have already stated this is nut, imho.

Basically, that's an outrageously high amount; pretty soon, Bitcoin price movements would affect their stock price more than any other factor.

Bitcoin price movements have already been affecting their stock prices in pretty damned extreme ways in the past 9 months (like the time to have a baby), and MSTR/Saylor's reaction has been to go deeper and deeper and deeper... so who knows?  He does seem to be gambling, but he does seem more than willing to gamble and it is still looking pretty damned good for him on paper, even with BTC prices having had sunk 53% from the $64,895 top of two-ish months ago. 

Personally, I think that he does have a quite a lot going in his favor, even though the behavior and actions seem to be quite outrageous and he does not seem ready, willing or able to stop (at least, not yet).. but yeah, some of us consider that at some point, he is going to have to feel somewhat saturated or at least good enough, but maybe a lot of CEOs have those kinds of overly assertive personality traits.. and the ongoing amazingness of it all may or may not end up paying off as BIGGEDly as the risked calculation (i.e. gambling) might suggest the odds to be.

[The Sceptical Chymist]

At this rate, microstrategy are tilting more towards a Bitcoin oriented company than any of the other services they offer.

Seriously.  It's really making me wonder what their end goal is with bitcoin, if they have one.  They can't buy so much bitcoin that they basically paint themselves into a corner they can't get out of, so there has to be a point where they're done buying--but I don't believe Saylor has made mention of his intentions.

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price, because it's a hell of a lot of money they've spent acquiring it, even now taking on debt in order to finance the buy.  Part of this whole thing just doesn't make sense to me, because MSTR isn't actually a bitcoin company and although companies should have cash reserves, they don't take on debt to secure them like MSTR has done.  I get that Saylor thinks bitcoin is a better alternative to fiat, but still.  Seems really crazy to me.

[Upgrade00]

Seriously.  It's really making me wonder what their end goal is with bitcoin, if they have one.  They can't buy so much bitcoin that they basically paint themselves into a corner they can't get out of, so there has to be a point where they're done buying--but I don't believe Saylor has made mention of his intentions.

I personally will not be surprised if they create a Bitcoin fund to manage the assets of other holders, Michael Saykor has already built quite a presence in the crypto space and can sufficiently make such a plunge.

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price, because it's a hell of a lot of money they've spent acquiring it, even now taking on debt in order to finance the buy. 

It would also be a good test of their resilience to hold for many years, it's easy when the price is rising, but the pressure starts to mount during big dips, would be interesting to see what his reaction would be.

[JayJuanGee]

At this rate, microstrategy are tilting more towards a Bitcoin oriented company than any of the other services they offer.

Seriously.  It's really making me wonder what their end goal is with bitcoin, if they have one.  

You, The Pharmacist, have been following this thread from the start, and you have been actively participating in the thread.

You have been asking variations of the same question over and over, and surely your questions and concerns have gotten stronger and stronger with the higher doubling down that MSTR/Saylor have performed.

Seems to me that either something is not sinking in for you or you just like repeating the same question because you are disingenuous on the topic.

I am way more inclined to conclude that you engaging in the former rather than the latter, but I am still having some troubles appreciating why something is not sinking in for you.

MSTR/Saylor have been fairly clear about why they are engaged in their buying and leveraging behavior - and really, even from the start, Saylor/MSTR was not really a BTC dabbler.. He and his company went in pretty deep right from the start, and so when he has been going deeper and deeper that might seem nearly impossible to accomplish, but MSTR/Saylor has found a way that causes it to seem like compulsive gambling rather than prudent business practices.

Of course, MSTR/Saylor is going to appear to be much worse off if BTC prices go below their average buy price, which has been most recently to have been reported as slightly above $26k per BTC - yet even with that I really doubt that panic time should even come yet, even if there are some people, like you The Pharmacist that would like to start to panic for them before they are even prepared to start to panic.

For sure, this is showing quite differing ways of thinking about the kinds of plays that MSTR is making in this case... I mean in comparing how Saylor is thinking about the matter and the way that you, The Pharmacist, are worrying about the matter.

You likely realize that I remain bullish, and I continue to consider that not only is MSTR playing this matter well, but that they have employed a lot of decently creative financial instruments to carry out their investment plans.

I have already said that my own recommendations are for individuals and companies to start with 1-10% of their investible assets in bitcoin, and after the very first one or two investments into bitcoin, as shown in fillippone's chart, MSTR/Saylor far exceeded my own BTC recommendation.  But who the fuck am I?  Small potatoes compared to MSTR/Saylor and since they are adults, they have every right to come to their own judgements regarding what is reasonable/prudent or alternatively what is aggressive and assertive (and seems to me that MSTR/Saylor believes that being aggressive/assertive is a better approach to BTC investment--- so who am I to say otherwise - even though I been in BTC nearly around 6.5 years longer - but I surely do not have sophisticated lawyers, accountants and business guys working for my ass, either.. which can surely provide a lot of leveraging power to have a smart guy like Saylor who is leveraging his seeming smartness with other smart people).

Here's the full Portfolio


Coloured bands mean these purchases are tied to corresponding debt issuance.

Even though my business judgement is likely quite a bit more conservative than MSTR/Saylor, I am not going to second guess their business judgement when they decide to go with very highly assertive amounts, and then subsequently decide to go over 100% in terms of using debt and using credit to bolster their BTC investment which is quite likely calculable to be beyond 100% in a variety of ways that it could be measured in terms of their cashflows, investible assets, and just other assets that they have, such as good will (which can be also considered a kind of credit).

So, in some sense, I doubt that any of us are on grounds to be either second-guessing them or trying to substitute our judgement for their judgement - because each person/business has the freedom to employ their own business judgement - even if any of us might be coming to differing conclusions.

Another matter would be asserting that their decisions could negatively affect bitcoin or the bitcoin community in various ways, and I have difficulties appreciating how their behavior hurts the bitcoin community - and surely there could be scenarios in which they are forced to sell some or all of their bitcoins, but I consider those scenarios to be in a time frame that is further out, such as 3 years or more rather than being anything that should be of anything close to an immediate concern while they continue with their buying spree or their ongoing leveraging down on bitcoin behaviors.

They can't buy so much bitcoin that they basically paint themselves into a corner they can't get out of, so there has to be a point where they're done buying--but I don't believe Saylor has made mention of his intentions.

Yes, in theory such a place likely exists, but they do not seem to be there, yet.

 

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price,

We have already covered this.  BTC going below their average purchase price is not going to "do them in."

You are creating a strawman argument.

because it's a hell of a lot of money they've spent acquiring it,

Just because it is "a lot of money" that does not make the situation worse.  Let's say, for example, the BTC price goes down to $13k.. that would meant that their average buy price is double the BTC price.

On a personal level I can relate.  I got into BTC in late 2013, I kept buying BTC through 2014 and most of 2014, my BTC buy price was higher than actual BTC price.  In early 2015 BTC prices were around $200 and then the averaged around $250 for most of 2015, and in the beginning of 2015, my average price per BTC was around $570, but by the end of 2015, my average price per BTC was $500, so I had times that my BTC portfolio was only worth less than 1/3 that I had spent to buy the BTC, but I did not panic.. I continued to buy.  I also had some cashflow problems in early 2015 that lasted pretty much through 2015 and those cashflow problems were not really directly connected with BTC, but it still caused me some inabilities to buy and caused some people to suggest that I should sell some if not all of my BTC, but I told those people that they did not know what they were talking about (because they did not even understand what BTC is/was)..

I am thinking that there could be scenarios that Saylor/MSTR could be in similar scenarios, and even if there are going to be naysayers, like you The Pharmacist, who are going to tell them that they "better figure out their end game" they are already going to have an investment thesis and timeline that goes beyond your concerns about what the immediate price of BTC happens to be - that is if the MSTR/Saylor portfolio goes into negative territories and stays there for a decently long time of maybe even a year or longer or even several years, perhaps?

even now taking on debt in order to finance the buy.  Part of this whole thing just doesn't make sense to me,

It does not need to make sense to you.

because MSTR isn't actually a bitcoin company

So what?  they can transition what kind of company they are.  It is not like they have been hiding their transition or their possible transition.

and although companies should have cash reserves,

I did not know that there was any kind of standard formula that companies have to follow, especially if they believe that they are trying to be innovative in various ways.. and still disclosing their purported "innovation."

they don't take on debt to secure them like MSTR has done.  

Sure companies might not use debt exactly in the way that MSTR/Saylor has decided to employ such debt, but it is not like he is being secretive about what he is doing.. so I am having trouble seeing your issue, exactly, even though I do understand that you are concerned about volatility risk - and especially downside volatility risk.

I get that Saylor thinks bitcoin is a better alternative to fiat, but still.  Seems really crazy to me.

Seems crazy to a lot of people (even other bitcoin maximalists), but Saylor has explained his approach, too.. which makes it seem less crazy, no?

Seriously.  It's really making me wonder what their end goal is with bitcoin, if they have one.  They can't buy so much bitcoin that they basically paint themselves into a corner they can't get out of, so there has to be a point where they're done buying--but I don't believe Saylor has made mention of his intentions.

I personally will not be surprised if they create a Bitcoin fund to manage the assets of other holders, Michael Saykor has already built quite a presence in the crypto space and can sufficiently make such a plunge.

Yep... Seems like a very plausible direction for MSTR/Saylor or that new entity that they are using called Macrostrategies (don't know the ticker).

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price, because it's a hell of a lot of money they've spent acquiring it, even now taking on debt in order to finance the buy.

It would also be a good test of their resilience to hold for many years, it's easy when the price is rising, but the pressure starts to mount during big dips, would be interesting to see what his reaction would be.

Even though I would prefer to NOT go below $26k, and I would also prefer NOT to stay below $26k for any kind of extended time such as 1-2 years, but sure, it would remains an interesting subject matter to see how MSTR/Saylor would react and play their game in such a scenario.. would they go into silent mode, like a lot of people tend to do while they are underwater?  I am thinking that they would not, but hey hard to know  until it happens, if it were to happen.

[fillippone]

because MSTR isn't actually a bitcoin company

So what?  they can transition what kind of company they are.  It is not like they have been hiding their transition or their possible transition.

There is a point here.
Microstrategy is now 60% of their MArket Capitalisation a Bitcoin Company. It means they have value at the 60% for the bitcoin they hold. If this was with traditional financial instruments would make them a financial company, i.e. subject to a more stringent and severe standard of regulations. This is not currently happening because of the unregulated framework for bitcoin.
This is obviously something the regulators must think about, as it has many consequences. Not saying there is anything wrong with that, but Microstrategy investors, both in equity and in debt, are exposed to a series of perfectly legitimate choices by Microstrategy (selling all their Bitcoins at once, transferring the bitcoin to any firm, change in the type of society, delisting or many more others) that could potentially hurt their investment, and are more strictly regulated for financial entities.

[The Sceptical Chymist]

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price, because it's a hell of a lot of money they've spent acquiring it, even now taking on debt in order to finance the buy. 

It would also be a good test of their resilience to hold for many years, it's easy when the price is rising, but the pressure starts to mount during big dips, would be interesting to see what his reaction would be.

I get that, but we're not talking about just Michael Saylor here; he isn't buying all of that bitcoin for himself, but for MSTR--and they're publicly traded, which means there's a board of directors and shareholders who might be extremely unhappy should bitcoin tank.  They might start to question why the money used to buy bitcoin wasn't used for their core business instead of using it for a bitcoin buying spree, which also increased the debt on their books.

Again, I truly am hoping that everything works out for MSTR (and for all bitcoin holders), but surely everyone can see what might happen should bitcoin enter a prolonged bear market.  MSTR might even be forced to sell, and that could well be a disaster for everyone else owning bitcoin.  Plus, the more MSTR buys the more centralized bitcoin becomes, even though they're far from cornering the market in it.  I'm hoping Michael Saylor knows when enough is enough.

[Dabs]

MSTR while it is a company, is mostly controlled by Michael Saylor. Or so I've read. If he has at least 51% of the voting power / shares / whatever of the company then there's not much all the rest of the board can do if they even disagree.

At more than 100k BTC held by the company, at the rate they are buying it, it's going to be difficult to get more than maybe 500k BTC any time soon. That was around the largest balance ever in one single address or one entity or one person controlling bitcoin in it's history, if I remember it was some guy MagicalTux (or MtGox) moved it from one address to another to prove he controlled that much bitcoin many years ago.

[JayJuanGee]

And as I've said before, for MSTR's sake I hope bitcoin stays above their average purchase price, because it's a hell of a lot of money they've spent acquiring it, even now taking on debt in order to finance the buy.

It would also be a good test of their resilience to hold for many years, it's easy when the price is rising, but the pressure starts to mount during big dips, would be interesting to see what his reaction would be.

I get that, but we're not talking about just Michael Saylor here; he isn't buying all of that bitcoin for himself, but for MSTR--and they're publicly traded, which means there's a board of directors and shareholders who might be extremely unhappy should bitcoin tank.  They might start to question why the money used to buy bitcoin wasn't used for their core business instead of using it for a bitcoin buying spree, which also increased the debt on their books.

We have covered that topic a few times in this thread too, and what is it that you are still not getting, The Pharmacist?  Or maybe you get it and no one else does?  Perhaps?

How do you contemplate that obligations differ for a publicly traded company versus a privately traded company versus an individual?

Being a publicly traded company does not cause the business to have to give up their business judgement.

I understand that people describe obligations of publicly traded companies as onerous, and sure there are paperwork and disclosure obligations, but still largely publicly traded companies can do whatever the fuck they want, including changing their mind and changing their business direction and engaged in outrageous risks.

I would venture that almost every time that a publicly traded company gets its little selfie into trouble it is because they had engaged in hiding the ball kinds of behaviors.  There is absolutely no evidence that Saylor/MSTR is engaging in hiding the ball kinds of behaviors, even if you The Pharmacist disagree with the aggressiveness of MSTR/Saylor's approach to BTC.  If you made any kind of legal claim against them, your claim would likely be laughed out of the court.

Again, I truly am hoping that everything works out for MSTR (and for all bitcoin holders),

You are sure worried.  I hope that you are o.k..

but surely everyone can see what might happen should bitcoin enter a prolonged bear market.  

We do not see as well as you do, The Pharmacist, because we have these damned laser eyes fogging up our visions, apparently.

MSTR might even be forced to sell,

Possible.. but surely not too likely at this time.

and that could well be a disaster for everyone else owning bitcoin.  

Even if they’ve  were forced to sell some or even all of their BTC, I doubt that it would be a disaster for everyone else.. sure there could be some short term price affects but whatever.... anyone investing in bitcoin needs to be prepared for both UPpity and DOWNity, and in my 7.5 years experience in bitcoin, it seems that I see way more preparations for DOWNity than I do for UPpity... so sure not saying that people should not prepare for DOWN, even though there seems to be way more needs to prepare for UP.. generally speaking...

Now, currently as I type, those folks who had prepared for DOWN are feeling vindicated.. with BTC prices touching upon $29,473 and lower with a pretty BIG ASS seemingly free-falling red candle currently forming as I type this post.

Plus, the more MSTR buys the more centralized bitcoin becomes, even though they're far from cornering the market in it.  

Bitcoin currently is the most decentralized asset class that the world has ever seen.. and there still seems to be nothing really too close to it.. especially with BTC's digital properties... Surely and interesting and paradigm changing asset class currently in our spotlight.

I'm hoping Michael Saylor knows when enough is enough.

He might not.  He has already gone beyond your personal "enough is enough" several times.. probably even his first few purchases, so his assessment of enough might end up being wrong, even on any kind of objective measures, but people are entitled to act in ways that they perceive to be in their own interest, even if they end up being wrong.

MSTR while it is a company, is mostly controlled by Michael Saylor. Or so I've read. If he has at least 51% of the voting power / shares / whatever of the company then there's not much all the rest of the board can do if they even disagree.

At more than 100k BTC held by the company, at the rate they are buying it, it's going to be difficult to get more than maybe 500k BTC any time soon. That was around the largest balance ever in one single address or one entity or one person controlling bitcoin in it's history, if I remember it was some guy MagicalTux (or MtGox) moved it from one address to another to prove he controlled that much bitcoin many years ago.

Yes... currently, MSTR owns something like half of a percent of the total BTC supply that will ever be available, and even if we might presume that 7 million BTC or more are lost or not recoverable or will get to that status, and we calculate BTC's supply at 14 million rather than 21million, then at that point, currently Saylor owns around 0.75% of the BTC supply... so still less than a full percent.  Like you suggest Dabs, Saylor could get to a couple of percentages of the supply, but even getting to 3% or more of the BTC supply would likely be quite a feat.. not impossible, but surely difficult for anyone except custodians... .Actually there have been a few speculations that MSTR/Saylor may well get into some variation of the BTC "custodian" business, which does not seem to be any kind of a far fetch for an addition to their already existing business - especially if they can figure out ways to monetize such custodian business.. and even the monetization of bitcoin custodian could be a problematic business... .. but sure, they might be ready, willing and able to go down that BTC custodian path, perhaps?

[Lucius]

At more than 100k BTC held by the company, at the rate they are buying it, it's going to be difficult to get more than maybe 500k BTC any time soon.

At a price that we have now or higher, it is completely unrealistic to expect that company to reach $500k BTC in the near future, because MS is now buying very small quantities and will probably continue to do so - so I doubt that at this rate it can double the amount it now has even by the end of 2022 - unless by some miracle he invents a way to find a few billion $ and spend it on buying BTC.

Again, I truly am hoping that everything works out for MSTR (and for all bitcoin holders), but surely everyone can see what might happen should bitcoin enter a prolonged bear market.  MSTR might even be forced to sell, and that could well be a disaster for everyone else owning bitcoin.  Plus, the more MSTR buys the more centralized bitcoin becomes, even though they're far from cornering the market in it.  I'm hoping Michael Saylor knows when enough is enough.

I’ve already written that it’s kind of bad when a lot of things start to focus on one man or one company - one man’s opinion or moves shouldn’t have such a big impact on Bitcoin - but people are already wondering what his intentions are, and what he could do if things went downhill for his company.

[oHnK]

Microstrategy finally released their statement about the BTC purchased following las debt issuance:


https://twitter.com/michael_saylor/status/1406946140344442882?s=21

I really interested to see what is the next strategy of MSTR if the price down and reach the lower level at $26.000. Whether they will hold if they lose or add some BTC again? At this time, the price of BTC is $29400, so it means that the difference is only about $3500 from MSTR's average purchase price.  If the market continues to be in a bearish condition, it is possible that the price will be below their purchase price.  The BTC support point has been crossed until it becomes the lowest level since the bull market.  Will the average down strategy be effective for now?

[fillippone]

I’ve already written that it’s kind of bad when a lot of things start to focus on one man or one company - one man’s opinion or moves shouldn’t have such a big impact on Bitcoin - but people are already wondering what his intentions are, and what he could do if things went downhill for his company.

We are still very early in the adoption of bitcoin.
Also it is an unregulated market, so there is a full array of manipulation technique available to those that can profit on them.
And if someone can profit using a manipulation, they will do that.

After all, even in the dollar market, there is a focus on one man (Powell, Yellen..) and a "company" (FED, Dept of Treasury). And the US Dollar  had order of magnitude bigger market capitalisation.

[Lucius]

@fillippone, don't get me wrong, I have nothing against Saylor in general, the man is very firm in his beliefs so far, and is not one of those who say one thing today and do the exact opposite tomorrow. What I want to say is that people are always a little scared that someone is accumulating an asset that has max supply, maybe because they are afraid that at some point he will make a dump - or that he will buy everything, so they will have nothing left

What we can't blame him for is the fact that he didn't cause a drastic price increase considering the way Coinbase buys for him - which is really fascinating to me considering that various companies and funds (publicly known data) own over 8% of max BTC supply which is almost 1 700 000 BTC - which still seems pretty small to create a real shortage on OTC and crypto exchanges.