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

[JayJuanGee]

Oh gosh Timelord.. you really believe that we are in some kind of a meaningful and significant trend that lacks upward support?

Sure we had more than a 70% price increase from the local bottom of $28,600 to $50,562, so getting some pausing or even an 8% pullback down to $46,309 in the past 36 hours should not be considered anything to write home to mom about.  In other words, your thoughts of downity seem a bit over prognosticated, but hey.., you do you in terms of your BTC price expectations.

To be honest, I can't recall why I was writing that the price was going down - I know I wrote three or four items over that week about the lack-luster price as Bitcoin had stagnated somewhat.  However, the price has been on the up and up with the price again trending upwards.  No doubt someone in a few weeks time will ask why I wrote that.

If anything, it seems as though news of MicroStrategy's bulk buy has lifted people's confidence in BTC (much like the car salesman's push a few weeks back) and we're being moved out to the launch pad for liftoff any day now.

It seems to be problematic to be getting too tied down into narrow causations of short term BTC price moves, and of course we have waves, we have momentum and we have reversals too... and even given all of that there seems to be some need to account for currently valid BTC price prediction models, too.. including 1) stock to flow, 2) four-year fractal and 3) exponential s-curve adoption based on network effects and Metcalfe principles.   

Sure, those models do not provide specifics and surely they are based on probabilities, too.. but they still seem to have decent predictory power regarding overall trends.. including that we have likely been in a bull market since about April 2019.. even though we have had some pretty decent corrections along the way.. and fuck the explanations that try to suggest that MSTR/Saylor is causing the BTC price.. sure on the margins, it is possible, and sure he may have been exacerbating a preexisting condition, but in the end, he was jumping on a train that was already heading in a certain direction... including what people think and blah blah blah.. sure those things might help.. but the train rocket ship is already heading up.. so seems that figuring out or seeing if this particular cycle ends up toping at $64,895, $150k, $300k or some other higher point variant (or something in between) is still in the cards, and it still seems pretty likely that $55k to $80k is a kind of noman's zone, even if we might have a significant and meaningful correction (of let's say 15% to 25% or more) before getting into such noman's zone.. but the overall momentum still seems to continue as UP.. even if there might be some more downs (yet largely bumps in the road) along the way...

....and it appears that even our 56% correction from $64,895 to $28,600 that kept us in the lower $30ks for more than two months was largely noise in this whole UPpity scheme.. even though it scared a lot of folks out of their coins because they wrongly concluded that we were out of the bull market.. and such loosey goosey discussion of short-term BTC price moves can surely cause BTC HODLers to lose their sight upon what is the prize exactly.. and that is BTC including trying to accept BIG picture trend ideas - while realizing that none of the specifics are guaranteed even though the odds remain favorable to the BIG picture trend ideas including that we are still likely in a bull market even though we may well experience another correction around here (or maybe not, too).

[1713909664]

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[ShowOff]

-snip-
....and it appears that even our 56% correction from $64,895 to $28,600 that kept us in the lower $30ks for more than two months was largely noise in this whole UPpity scheme.. even though it scared a lot of folks out of their coins because they wrongly concluded that we were out of the bull market.. and such loosey goosey discussion of short-term BTC price moves can surely cause BTC HODLers to lose their sight upon what is the prize exactly.. and that is BTC including trying to accept BIG picture trend ideas - while realizing that none of the specifics are guaranteed even though the odds remain favorable to the BIG picture trend ideas including that we are still likely in a bull market even though we may well experience another correction around here (or maybe not, too).

The last word I bolded shows that you still believe that the price of bitcoin will not experience a bigger correction than a few months ago which reached -56%. The price of bitcoin will not be independent of volatility so we cannot expect it to continue rising all the time. A price correction will grace the streets before the holder will finally receive the long awaited prize. Weak hands will be greatly affected by the correction while strong hands will see it from a different perspective. Big holders will expect bigger rewards, while day or seasonal traders are constantly trying to maximize profits in the short term. Institutional investors including MicroStrategy are the reason why I should have a much stronger hand than day or seasonal traders, this is a risk I have fully considered so far.

[oHnK]

Michael Saylor's strategy regarding the commitment to bitcoin apparently caused anger in the S&P Dow Jones Indices, they decided to make the following adjustments to the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices, including MicroStrategy Inc.which will be removed from the S&P SmallCap 600. The changes will take effect before the opening of trading on Monday, September 20, 2021, to coincide with the quarterly rebalancing: Healthcare Services Group will replace $MSTR MicroStrategy Inc. in the S&P SmallCap 600. MicroStrategy is no longer suitable for the S&P SmallCap 600, as well as United Insurance Holdings, according to a press release from S&P Dow Jones Indices. https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20210903-1443045/1443045_sept2021-546-shuf-rebal.pdf

The anger of the S&P Small Cap 600 Index is so baseless that they even mention that the MSTR strategy is no longer compatible with the index.  It seems to be fairer, they should explain more specific points.  Which strategy is not suitable, does the company open in BTC investments making the index problematic?  where is the problem.  Even so far, MSTR's share price has remained stable.  which market capitalization do they measure? CMIIW

[JayJuanGee]

-snip-
....and it appears that even our 56% correction from $64,895 to $28,600 that kept us in the lower $30ks for more than two months was largely noise in this whole UPpity scheme.. even though it scared a lot of folks out of their coins because they wrongly concluded that we were out of the bull market.. and such loosey goosey discussion of short-term BTC price moves can surely cause BTC HODLers to lose their sight upon what is the prize exactly.. and that is BTC including trying to accept BIG picture trend ideas - while realizing that none of the specifics are guaranteed even though the odds remain favorable to the BIG picture trend ideas including that we are still likely in a bull market even though we may well experience another correction around here (or maybe not, too).

The last word I bolded shows that you still believe that the price of bitcoin will not experience a bigger correction than a few months ago which reached -56%.

Does not seem like I said that, exactly... although when BTC prices passed significantly above $46k in the past couple of weeks, I had considered that the odds had become pretty damned high.. perhaps moving from 58% to greater than 63% that the $28,600 bottom was in... and BTC price going quite significantly higher than $46k and even touching upon $52,956 yesterday seems to have increased the odds that $28,600 is the bottom for this cycle.. perhaps even going above 66%.. perhaps? perhaps?  

Regarding other kinds of large correction ramifications, I am not going to rule out up to 80% BTC price corrections in the future.. but sometimes the level of correction and what is possible for a correction may well depend on how high the BTC price goes and how long it takes to get there.  

For example, if the BTC price were to go up to $1.5 million in this particular cycle (which probably is in the lower single digits of possibilities.. maybe less than 2% odds), then the odds for a 80% or larger correction is more than reasonable... but if the high ONLY ends up being in the sub $100ks, then the odds of another 80% BTC price correction prior to going up above $100k would seem to be pretty damned low.. at least from my current perspective of what seems possible and/or reasonably within the odds of possible.

The price of bitcoin will not be independent of volatility so we cannot expect it to continue rising all the time.

One of the only things in bitcoin that is nearly inevitable is its likely ongoing volatility, including relatively violent volatility... so I am not even presuming that the BTC price is going to be volatile to the upside, especially in the short term.. but in the long term there are still pretty decent odds that BTC prices are going up.. at least greater than 50%.. and I already mentioned some of the models and you can assign whatever odds you like to them.

A price correction will grace the streets before the holder will finally receive the long awaited prize.

Huh?  You are talking about now or in the future.  Depends.  I never said anything with any kinds of certainty.. I only talked about probabilities.  You act like you know which way the BTC price is going to go before it happens, and I doubt that you know much of anything except perhaps assigning too high of probabilities to events that have not happened yet.

Weak hands will be greatly affected by the correction while strong hands will see it from a different perspective.

 There were likely a lot of weak hands shaken in the 56% correction from $64,895 to $28,600.. so sure there are always some weak hands to shake and it is not always clear which are which but surely there can be some signs that weak hands likely in need to be shaken, but that does not necessarily mean that such shaking will happen.. sure we finally seem to have gotten a kind of spike correction down to $42,900 as I was typing my responsive post, but even with that kind of a spike correction, there is likely ongoing uncertainty if there might be more down from here or leveling off from here or we will return to UP from here.. hard to know, even though the trend can be your friend if you can figure it out, while it lasts.. and before it reverses.

Big holders will expect bigger rewards, while day or seasonal traders are constantly trying to maximize profits in the short term.

So what?  

Bitcoin happens to be one of those asset classes that normies have front run the hell out of traditional status quo financial people, and hopefully the vast majority of normies do not get too involved in either trading or trying to figure out short term dynamics because short term dynamics do not matter as much as having a longer term plan.. and the Microstrategy/Saylor strategy - which also happens to be the subject matter of this thread tends to emphasize longer term strategies including ongoing BTC accumulation.

Do you believe that MSTR/Saylor has some kind of strategy other than what they have been asserting to be their strategy?  You believe that they are going to dump on retail?  Do you believe that they encourage other companies or institutions to dump on retail?  I am not really sure where you are going with your arguments, ShowOff because it seems that MSTR has been buying into bitcoin in the past year-ish and promoting the idea of buying BTC.. so they neither promote selling nor trading as you seem to suggest that there is some kind of worry that normies might need to have in regards to others who might be trading or attempting to manipulate the BTC market.. and sure they can try, but there are some interesting and unique aspects of bitcoin that should motivate attempts to analyze it for what it is rather than merely making general statements that suggest
that normies might not be able to profit from attempting to follow some similar strategies as MSTR/Saylor, at least in terms of attempting to accumulate bitcoin and holding it for the long term.  Of course, the use of credit might be beyond the means or abilities of a lot of normies.. but some might be successful in mimicking MSTR/Saylor in that regard too.. perhaps? perhaps?

Institutional investors including MicroStrategy are the reason why I should have a much stronger hand than day or seasonal traders, this is a risk I have fully considered so far.

I have frequently suggested that anyone getting into bitcoin should have at least a four year strategy, and surely if the strategy is longer than 4 years then that is great too... so it could take a lot of normies a few BTC cycles before they really are able to accumulate a sufficient quantity of BTC or that their accumulated quantity of BTC puts them into a place that they are beyond accumulation and either enter into maintenance or liquidation.

Of course, there are some people who are advantaged and can get into BTC with lump sums and transferring of value from other assets that they hold in the investment portfolio, but a lot of people may well have to rely on various forms of DCA investing and buying BTC on dips in order to build their BTC portfolio over time.. and surely some of those people would prefer the BTC price to stay down for longer and lower.. while they are able to accumulate more of it.. .. but normies can ONLY do what they can do and attempt to strategize as best as they can to 1) attempt to create a strategy that works for them 2) does not end up overinvesting or not being able to cover expenses, 3) create targets of BTC accumulation or value accumulation goals 4) reasonably attempt to employ customized BTC accumulation strategies that may well include lump sum investing, dollar cost averaging / DCA and buying on dips and 5) tweak their plans, strategies and implementations along the way as they learn more.

Michael Saylor's strategy regarding the commitment to bitcoin apparently caused anger in the S&P Dow Jones Indices, they decided to make the following adjustments to the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices, including MicroStrategy Inc.which will be removed from the S&P SmallCap 600. The changes will take effect before the opening of trading on Monday, September 20, 2021, to coincide with the quarterly rebalancing: Healthcare Services Group will replace $MSTR MicroStrategy Inc. in the S&P SmallCap 600. MicroStrategy is no longer suitable for the S&P SmallCap 600, as well as United Insurance Holdings, according to a press release from S&P Dow Jones Indices. https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20210903-1443045/1443045_sept2021-546-shuf-rebal.pdf

The anger of the S&P Small Cap 600 Index is so baseless that they even mention that the MSTR strategy is no longer compatible with the index.  It seems to be fairer, they should explain more specific points.  Which strategy is not suitable, does the company open in BTC investments making the index problematic?  where is the problem.  Even so far, MSTR's share price has remained stable.  which market capitalization do they measure? CMIIW

Who gives any shits about whether the S&P 600 includes Microstrategy or not?

Surely, there could be a lot of understanding that if a company such as MSTR invests a lot into bitcoin then the company has a lot of its current value and potential future value tied up into such investment.. so surely the S&P 600 might have great reasons for removing MSTR from such index.. but has no impact on whether MSTR is a good investment or BTC is a good investment, and surely many members in this forum already recognize and have already realized a lot of the upside appreciation of BTC that is not really too likely to stop any time soon, even though there are likely going to be some corrections along the way... but again, so what and who cares about whether S&P 600 allows MSTR in their little club.

[Daltonik]

Who gives any shits about whether the S&P 600 includes Microstrategy or not?

I do not believe that the S&P SmallCap 600 has any significance for bitcoin adherents, rather on the contrary, it's just that the institutions clearly show their attitude to the crypt in the way they can, in this case, throwing companies out of the rating list. Michael Saylor apparently does not regret that he invested in bitcoin, emphasizing that if a year ago he had chosen gold, it would have been a mistake worth billions of dollars.

[Daltonik]

Unlike CEO Michael Saylor, who has not sold any shares since 2012, some senior executives of MicroStrategy are ambivalent about the implementation of the bitcoin strategy-as an investment tool.

SEC documents show that MicroStrategy chief financial officer Phong Le and chief technology officer Timothy Lang offloaded the shares in August of this year, exercising approximately 30% of the options they received as compensation. https://www.sec.gov/Archives/edgar/data/0001050446/000119312521117745/d64521ddef14a.htm https://www.sec.gov/Archives/edgar/data/0001050446/000119312521117745/d64521ddef14a.htm

source: https://cointelegraph.com/news/insiders-sold-microstrategy-stock-after-bitcoin-s-bull-run

[fr4nkthetank]

says they still hold 2/3 of their options or something like that.  7 million each.  I mean its not a bad thing to exercice stock options.  I would just for the goal of diversifying my assets, and not have everything in the same company.

[fillippone]

Unlike CEO Michael Saylor, who has not sold any shares since 2012, some senior executives of MicroStrategy are ambivalent about the implementation of the bitcoin strategy-as an investment tool.

SEC documents show that MicroStrategy chief financial officer Phong Le and chief technology officer Timothy Lang offloaded the shares in August of this year, exercising approximately 30% of the options they received as compensation. https://www.sec.gov/Archives/edgar/data/0001050446/000119312521117745/d64521ddef14a.htm https://www.sec.gov/Archives/edgar/data/0001050446/000119312521117745/d64521ddef14a.htm

source: https://cointelegraph.com/news/insiders-sold-microstrategy-stock-after-bitcoin-s-bull-run

Bear in mind that ofter those shares are part of the compensations for top-tier management.
Instead of paying themselves huge remuneration in the startup phase, where they would lack the funds, they issue moon-striked options that would allow them to cash out if the startup is successful. Turns out that this is also very tax-efficient, allowing them to save huge capital gains. 

[fillippone]

Michael Saylor continues to accumulate BTC reserves. He announced today that MicroStrategy has additionally purchased 5050 BTC.

This is a big purchase.
We have seen Microstrategy buying bitcoin with “spare cash”, or clips of around 10 millions, from what I think is generated trough their commercial operations. On the other hands we have seen them buying large chunks on the back of debt issuing or ATM facility.

Going into the details it would seem they issued some more shares trough the ATM facility, leaving only 20 millions trough direct buying.

This would change a lot.

I updated the spreadsheet in this way.

The Twitter version of myself asked Micheal Saylor if he can clarify some points here. I bet my questions will go unnoticed.

[The Sceptical Chymist]

Well, Saylor is buying again at any time and does not wait for market corrections to buy the cheapest coins.

He'd be silly to try to do that.  It's almost impossible to time the stock market, much less the bitcoin market.  And I think Saylor believes bitcoin is headed much, much higher than it is at any price point in the range it's been trading at for months now, so in his eyes $48k is a steal. 

And holy shit, that's a huge bitcoin purchase!  Granted, I expected MSTR to buy more bitcoin, but wow.  Now I'm wondering when they're going to stop buying--obviously the money to finance the purchases has to come from somewhere, and there's got to be a limit even for the most hardcore of bitcoin bulls. 

Currently MicroStrategy holds ~114 062 BTC and is the largest Bitcoin holder among institutional investors.

That's astounding.  Hopefully MSTR has strong hands, because as I've said before if they were to dump that bitcoin on the market all at once, it'd be a big OUCH to every bitcoin holder in existence.  Pretty sure that's not going to happen, though.

[fillippone]

I finally managed to put online an updated version of my spreadsheet:
Please bear in mind that I haven't seen this posted elsewhere.


Source

Microstrategy financed the larger part of this new buy via their ATM facility.
You read it here first.

[Poker Player]

The large-scale purchase of bitcoins seems to have improved MicroStrategy's performance in the stock market. I wonder what happens if Saylor suddenly decides to get rid of bitcoins?

If that were to happen, the share price would drop significantly because Saylor has repeated ad nauseam that a premium asset you don't sell it, if anything you borrows against it, least of all in the case of Bitcoin, which is the best. Other times he speaks of holding at least a decade.

Giving up trust in a company's CEO is a good reason to sell the stock, which I did in the case of AT&T.

[oHnK]

in my opinion, these are just fine words, nothing more. You shouldn't rely on them.

When a Bitcoin investor relies on Whales' statements, I don't understand why that can happen, let alone the most risky market right now is the crypto market.  Statements and the entry of institutional investors should be a momentum to take action on investment decisions and our portfolio in our investment position to take advantage of it.  The MSTR CEO's words are indeed still quite stable and support BTC but we can't make it like Elon Musk.  When EM said it supported, the price immediately went up and when Tesla banned BTC again the price immediately fell.  Bubble because the issue should be addressed wisely so that the crypto ecosystem remains stable.  Currently, the issue of China is no longer dominant in the market.  The market is moving on from the previous major correction, and I hope that players in the crypto market are mature enough to respond to the ongoing movements so that price appreciation continues to occur.

[Dabs]

He even once stated that MicroStrategy will not sell bitcoins in this century, but I have already repeated many times that, in my opinion, these are just fine words, nothing more. You shouldn't rely on them.

True, words can change. But usually medium to large companies take time to move or do anything. It is likely that in order to sell any bitcoins, as a company, the entire board would have to be convinced, and while we speculate, I'm fairly confident that their self-custody solution for bitcoin is both cold storage and multi-signature, so it's going to either take more than one person or more than one device and possibly more than one location to move any bitcoins. Inconvenient security.

[fillippone]

Some companies live in the year 3000:


https://twitter.com/BitcoinMagazine/status/1438153945118134277?s=20

Bloomberg piece:

MicroStrategy’s Bitcoin Pile Dwarfs Most S&P 500 Cash Holdings
Software company recently bought an additional 5,050 Bitcoins
Value of digital assets have swelled to about $5.3 billion
By Julia Fanzeres and Tom Contiliano

(Bloomberg) --
MicroStrategy Inc.’s Bitcoin holdings dwarf the traditional corporate treasuries of most members of the S&P 500 Index after its latest purchase swelled the value of the digital assets in its coffers to over $5 billion.

The enterprise software provider, which made Bitcoin purchases an official corporate strategy a year ago, announced Monday that it bought an additional5,050 Bitcoins for about $242.9 million, raising the value of its 114,042 coin hoard to about $5.3 billion. That’s more than the amount of cash currently held by 80% of the non-financial companies in the S&P 500, including such bellwethers as Starbucks Corp., Verizon Communications Inc. and Home Depot Inc.

Bloomberg
 
The company’s outstanding common shares are worth about $6.5 billion and it holds around $56.4 million in cash. Shares of MicroStrategy have surged more than 300% in the past year, mirroring the gains in Bitcoin. The stock fell 4.1% to $616.33 as of 2:56 p.m. in New York. Bitcoin gained 3% to $46,525.

[Daltonik]

Microstrategy CEO Michael Saylor in a dialogue with Emily Chang on bloomberg TV about the latest purchase of bitcoin for $250 million, the recognition of bitcoin as a means of payment in El Salvador and how the Solana and OpenSea scandals strengthen the SEC's movement towards regulation.

[fillippone]

Not exactly on topic, but Micheal Saylor gave a nice interview at Bloomberg TV.


https://twitter.com/bloombergtv/status/1438636397561323523?s=21

I am surprised how many answers are quite similar to the ones I would have given.



Ps. Going further OT: did I mention Emily Chang is hot?

[jaysabi]

MSTR's coins (and Saylor's personal stash as well) are not exactly "locked up", but I otherwise agree with the overall sentiment of your post Dabs and your various other points including that MSTR nor Saylor are likely to be either selling or attempting to be manipulating the BTC price, even if they are capable of doing whatever the fuck they want - in terms of free market aspects of bitcoin (but of course, there would likely be concerns from some regulatory bodies (such as SEC - and even share holder concerns) if Saylor were to try any kind of significant or meaningful levels of selling stocks to buy lower kinds of things).

His personal stash, maybe he can do whatever he wants with those, but I am guessing he has those under multi-sig and it will just be a hassle for him to actually do it.

The company stash, it's also very likely to be multi-sig with the board members, and the whole company has to agree. Maybe he has more signatures, but I'm almost sure he needs at least one more other person if it's set up correctly. There may possibly be a last resort backup plan like buried in some high security vault.

Maybe? We are just speculating. Imagine that one dude who has hardware wallets all over the planet and he's just a family man.

Most of these guys have their own "castles" ... I mean houses, or office buildings, with adequate physical security. If you had an actual gold bar, you could safely store your bitcoin paper wallet in the same place. Multi-sig would just require more than one of these safe places.

Also quite possible that Saylor has all the keys anyway, so he can still control all the bitcoin of the company all by himself, I'm still pretty sure it's in some form of multi-sig either case.

How do you think he stores his bitcoin? 18k BTC personal stash, and company coins 108k BTC ... ... You have that much, better put they keys in some building with armed guards. Be your own bank. Literally.

The board is definitely not a multisig, it wouldn't make sense for several reasons.  First, with any company, the board generally doesn't have access to bank accounts for the company so there would be no reason to give them such access with bitcoin through a mutlisig setup.  It's cumbersome and needlessly bureaucratic, and therefore unnecessary.  Also, the board doesn't really have any power to check Saylor due to his super majority voting power, so there's no reason for him to share responsibility with the board.  They serve as figureheads only with no real power in the company.  You definitely wouldn't give people like that responsibility to control any part of the company's day-to-day operations, which again would be needlessly bureaucratic.

[Kittygalore]

Microstrategy CEO Michael Saylor in a dialogue with Emily Chang on bloomberg TV about the latest purchase of bitcoin for $250 million, the recognition of bitcoin as a means of payment in El Salvador and how the Solana and OpenSea scandals strengthen the SEC's movement towards regulation.

I'm a bit wary about the OpenSea insider trading fiasco, I have about 3 or so NFTs in there and I hope that it won't affect the whole website at all because there's definitely going to be a lot of problem in this one and I do hope that we will see some solution to that issue that OpenSea has.

[worle1bm]

This accumulation has profited him and MSTR enough and he is kind of genius as he purchased btc at an average price of $28k approx which is even less then this year ATL by doing DCA investment.As per reports he has bought 285 bitcoins per day at an average as this whole thing was done in 400 days and you can see how much profits he have made out of it.Also MicroStrategy now holds more btc than cash reserves of 80% of companies in S&P index 500 which is amazing.He is still into it and will pour funds into it which is good news for all.