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

[Abelly]

What would happen to them if bitcoin goes to zero tomorrow ? They will got bankrupt, right ?

These hypothetical questions come up regularly, and many new investors assume that if Bitcoin goes to zero, everyone will go bankrupt. But the reality is a little different,

Bitcoin going to zero does not mean the price will drop, it means the entire network, hashrate, notes, transactions, everything will collapse together, in reality this is unlikely to happen because,

Bitcoin has no central company that can go bankrupt. Microstrategy, miners, exchanges are separate entities. Not having BTC does not mean they are bankrupt, it is not automatic.

The value of the Bitcoin network is based on people's trust and global nodes and hashrate, not on any corporate balance sheet.

Going to zero means some kind of extreme black swan event that will have to go through a major upheaval in the entire global financial system before it happens.

Those who are all in on a personal level will definitely see the face of death, zero means losing their entire capital.  But this idea of ​​network bankruptcy is actually a misunderstanding of the structure of Bitcoin.

Bitcoin is not a company. It can not bankrupt. It can only lose demand.
And if you want to reduce demand even further to zero, then even bigger problems will arise in human civilization.

Such questions on forums usually come from fear or misunderstanding.
Bitcoin going to zero is theoretically possible, but in reality it is so impossible that the entire global financial system will collapse before that.

[Bluedrem]

At the time of writing, each share of MSTR is worth $198.85, which means that MSTR currently has a Basic mNAV of 0.96x and a Diluted mNAV of 1.07x, which is much lower than a few months ago.
In the meantime, the famous quant Renaissance Technologies, whose actions are monitored by many investors and market analysts has announced the purchase of 225,730 shares of MSTR. This is definitely good news for Micro Strategy. At the moment, the price of various shares issued by Bitcoin-based Micro Strategy may be slightly lower due to the slightly poor performance of Bitcoin compared to a few months ago, but I think those who believe in Strategy will not be disappointed.

[tiCeR]

...

Well, according to Saylor in the interview linked above if Bitcoin returns were 0% from now on the company would last 80 years if they did nothing else in that time. I am not saying I buy his math but that's what he says. In my opinion, we are in a period similar to 2021 to 2023, when MSTR stock was in decline after the first Bitcoin purchases. Everything was said at that time too. And obviously, if we now enter a bear market lasting several years, not only would Strategy be fucked, as you point out, but so would those of us who have Bitcoin. However, as soon as things start to go halfway well with Bitcoin, the company will do even better.

That is what I meant in part in my post back from January.

It takes some time to understand the entire corporate finance structure, but to put in short terms, they have tools in place that protect them against both extremes. In that post I was talking about the capped call transactions in case of extreme price increases as that would dilute their share distribution by a lot because too many bond holders would execute their conversion rights, but since they have added call options on their own shares, they could actually conduct buybacks from the money they make from their options in their own shares. They have similar tools in place for price drops.

I am not saying I buy his math

I agree and ultimately every model has its limits and often times you only find out where those limits are when they are reached, i. e. when the whole thing crashes. You can calculate as much as you want and especially when structures are complex, there are dynamics you couldn't anticipate beforehand. That is an inherent characteristic of a complex model versus a complicated model.

[fikrett]

At the time of writing, each share of MSTR is worth $198.85, which means that MSTR currently has a Basic mNAV of 0.96x and a Diluted mNAV of 1.07x, which is much lower than a few months ago.
In the meantime, the famous quant Renaissance Technologies, whose actions are monitored by many investors and market analysts has announced the purchase of 225,730 shares of MSTR. This is definitely good news for Micro Strategy. At the moment, the price of various shares issued by Bitcoin-based Micro Strategy may be slightly lower due to the slightly poor performance of Bitcoin compared to a few months ago, but I think those who believe in Strategy will not be disappointed.

Those that understand will put their money on them as the biggest ones to go for BTC, imo.

We will see about that, but it seems there are enough players to think and do so.

[nikola22]

At the time of writing, each share of MSTR is worth $198.85, which means that MSTR currently has a Basic mNAV of 0.96x and a Diluted mNAV of 1.07x, which is much lower than a few months ago.
In the meantime, the famous quant Renaissance Technologies, whose actions are monitored by many investors and market analysts has announced the purchase of 225,730 shares of MSTR. This is definitely good news for Micro Strategy. At the moment, the price of various shares issued by Bitcoin-based Micro Strategy may be slightly lower due to the slightly poor performance of Bitcoin compared to a few months ago, but I think those who believe in Strategy will not be disappointed.

now Strategy's mNAV is 1.17 and I think there is too much unnecessary panic on the market. is this the first time Bitcoin holders have experienced a market drawdown?



https://www.strategy.com

there are still plenty of factors for growth. don't forget that Fed interest rates are still quite high and a rate cut is one of the factors driving Bitcoin's future growth.

[fillippone]

now Strategy's mNAV is 1.17 and I think there is too much unnecessary panic on the market. is this the first time Bitcoin holders have experienced a market drawdown?

There is a lot of unnecessary panic in the market, as this is the first market drawdown for a lot of market participants.
We are down year over year and a lot of ETF buyers are underwater. So yes, a lot of panic is going trough the street.
And of course leverage plays like Strategy are suffering, not only in their share price, but also in their debt instruments.

[Free Market Capitalist]

I wonder if there will be any purchases this week. Maybe Strategy ATMd something on Monday, but the price of everything has gone down, and with preferreds below $100 and MSTR with such a small mNAV, I don't think it will be able to buy. In other words, I wouldn't be surprised to see a mini purchase announced next Monday, but if things continue like this, we'll go back to the old days and we'll have to forget about weekly purchases.

[fillippone]

Surprisingly we are late commenting the latest development on Strategy.



According to JPM MSCI is considering a rule to exclude DATs and funds from their MSCI indexes.


JPMorgan Warns MSCI Decision Could Force Strategy Out of Top Equity Indices

• JPMorgan said Strategy’s recent sell-off reflects mounting fears of index exclusion rather than bitcoin weakness.
• MSCI’s Jan. 15 decision could trigger billions in passive outflows as major benchmarks reassess digital-asset–heavy balance sheets.
• The bank warned that index exclusion would hit the firm's valuation, liquidity and Strategy’s ability to raise capital.

This would have dire consequences over Strategy, as passive vehicle are "forced" to invest in every company added to the indexes. Providing them a consistent capital flow brought accumulation. If a company get unlisted in such indexes, it can not only lose the stock of allocated capital, but also being forced out the prospect buying.
The total amount of those account is 8 billion over the total market cap, whose 2.8 comes from MSCI allocator.

"With MSCI now considering removing MicroStrategy and other digital asset treasury companies from its equity indices...outflows could amount to $2.8bn if MicroStrategy gets excluded from MSCI indices and $8.8bn from all other equity indices if other index providers choose to follow MSCI"

Saylor replied with this post, stating that Strategy is not a fund, it is running a business about positive Bitcoin Yield.



This is a very interesting take and something that is crucial to the future of Strategy.

[whiteblue]

Surprisingly we are late commenting the latest development on Strategy.



According to JPM MSCI is considering a rule to exclude DATs and funds from their MSCI indexes.


JPMorgan Warns MSCI Decision Could Force Strategy Out of Top Equity Indices

• JPMorgan said Strategy’s recent sell-off reflects mounting fears of index exclusion rather than bitcoin weakness.
• MSCI’s Jan. 15 decision could trigger billions in passive outflows as major benchmarks reassess digital-asset–heavy balance sheets.
• The bank warned that index exclusion would hit the firm's valuation, liquidity and Strategy’s ability to raise capital.

This would have dire consequences over Strategy, as passive vehicle are "forced" to invest in every company added to the indexes. Providing them a consistent capital flow brought accumulation. If a company get unlisted in such indexes, it can not only lose the stock of allocated capital, but also being forced out the prospect buying.
The total amount of those account is 8 billion over the total market cap, whose 2.8 comes from MSCI allocator.

"With MSCI now considering removing MicroStrategy and other digital asset treasury companies from its equity indices...outflows could amount to $2.8bn if MicroStrategy gets excluded from MSCI indices and $8.8bn from all other equity indices if other index providers choose to follow MSCI"

Saylor replied with this post, stating that Strategy is not a fund, it is running a business about positive Bitcoin Yield.



This is a very interesting take and something that is crucial to the future of Strategy.

This was actually bad news for shareholders, but Saylor quickly responded, shareholders not to worry, as Strategy would use Bitcoin as a long-term asset.

However, some criticized Strategy for being too rash in buying Bitcoin. A more patient approach might have benefited from their accumulation rally, as Bitcoin's price is volatile, allowing them to wait to buy more btc.

The average purchase entry price is $74,000. If BTC corrects another $10,000, the Bitcoin price will reach the strategy's execution price. However, this type of cycle has occurred before when BTC has fallen further, so Saylor isn't overly concerned about the Bitcoin price, but shareholders certainly are.

[Free Market Capitalist]

However, some retards criticized Strategy for being too rash in buying Bitcoin. A more patient approach might have benefited from their accumulation rally, as Bitcoin's price is volatile, allowing them to wait to buy more btc.

Fixed that for you.

The average purchase entry price is $74,000. If BTC corrects another $10,000, the Bitcoin price will reach the strategy's execution price.

It's a shame there's no such thing as negative merit, because that's what you deserve for saying such nonsense, which shows that you don't understand anything. Although I see that the 250 you have were airdropped. So you haven't been able to earn a single merit in your entire life on the forum. I'm going to put you on my ignore list to avoid reading any more nonsense.

[adaseb]

I read that the MSCI issue was first discussed on Oct 10th which was the same day that Trump talked about the tariffs and caused both the stock market and crypto market to take a big dive. The difference with the stock market is that it recovered and hit a new ATH while Bitcoin didnt.

Many are speculating that the MSCI decision in January will be negative and many people were in a rush to get out, hence why there was just so much selling since that day. Obviously if the MSCI decision is that MSTR is allowed to stay in the index then we might rally from these lows but if they reject MSTR then many ETFs which track the index or other index will dump the stock.

They dump the stock and what happens then? MSTR might sell some BTC to do a stock buy back and bring BTC even lower which is what FGNX (FG Nexus) has been doing with ETH recently to prop up its share price.

[Free Market Capitalist]

According to Saulor's latest tweet, there don't seem to have been any purchases this week. This is logical given MSTR's low mNAV and the preferred shares trading below par.

They dump the stock and what happens then? MSTR might sell some BTC to do a stock buy back and bring BTC even lower which is what FGNX (FG Nexus) has been doing with ETH recently to prop up its share price.

That is a possibility that Strategy has acknowledged, but I highly doubt that they will start selling Bitcoin because the mNAV falls to 0.99. It would have to be a more significant figure.

[fillippone]

According to Saulor's latest tweet, there don't seem to have been any purchases this week. This is logical given MSTR's low mNAV and the preferred shares trading below par.

They dump the stock and what happens then? MSTR might sell some BTC to do a stock buy back and bring BTC even lower which is what FGNX (FG Nexus) has been doing with ETH recently to prop up its share price.

That is a possibility that Strategy has acknowledged, but I highly doubt that they will start selling Bitcoin because the mNAV falls to 0.99. It would have to be a more significant figure.

As Micheal saylor stated, they were down 50% when buying bitcoin in 2022, and nothing happened. Actually, they bought more.



Probably today the situation could be different, but the attitude could be the same.

[JayJuanGee]

However, some retards criticized Strategy for being too rash in buying Bitcoin. A more patient approach might have benefited from their accumulation rally, as Bitcoin's price is volatile, allowing them to wait to buy more btc.

Fixed that for you.

The average purchase entry price is $74,000. If BTC corrects another $10,000, the Bitcoin price will reach the strategy's execution price.

It's a shame there's no such thing as negative merit, because that's what you deserve for saying such nonsense, which shows that you don't understand anything. Although I see that the 250 you have were airdropped. So you haven't been able to earn a single merit in your entire life on the forum. I'm going to put you on my ignore list to avoid reading any more nonsense.

Now you make me feel bad Free Market Capitalist.  I sent him an smerit even though he had said some dumb shit, so maybe I am encouraging too much mediocrity?

[Free Market Capitalist]

Now you make me feel bad Free Market Capitalist.  I sent him an smerit even though he had said some dumb shit, so maybe I am encouraging too much mediocrity?

I don't see why you should feel bad. As I've said in other threads, I think you're the merit source who spends the most time on the forum and reads the threads and posts you merit in the most detail.

Among all the merits you send, there may be errors but you might not consider this an error at all, because we may disagree and I may believe that a post does not deserve any merit, while might do.

In my case, I said that he even deserves negative merit because he is talking about a supposed execution price that does not exist, and even less at $74K. As fillippone mentioned, in the previous bear market, the price of BTC fell 50% below the average purchase price, and not only did nothing happen, but Strategy continued buying.

At that time, it would have been even more logical to talk about an execution price because the financing was done with convertible debt, rather than preferreds and the ATM of the common stock.

And regarding the first quote, I think it's nonsense to say that Strategy has been too hasty in buying. What Strategy does is a DCA, with the difference that an individual usually buys the same thing at the same intervals, such as when a salaried employee saves $100 a week or a month to buy Bitcoin. The difference is that Strategy does not always have the same amount to buy; sometimes it is a lot, sometimes a little, and sometimes, like last week, it is nothing.

But as soon as they get money to buy, they buy, because they know full well that the short-term market is impossible to predict, and if you add to that the fundamental belief that Bitcoin will be much more valuable in 10 years and even more so in 20 years, the most logical thing to do is to buy as much as you can when you can, because at that moment you have the money to do so.

[Lida93]

As Micheal saylor stated, they were down 50% when buying bitcoin in 2022, and nothing happened. Actually, they bought more.



Probably today the situation could be different, but the attitude could be the same.

With the different various market challenges that Michael Saylor has literally experienced in all the years he started the bitcoin accumulation journey it would be very unrealistic that he would fright to selling his bitcoins any moment soon regardless of how low bitcoin price might fall. Instead it would continue to be for him and opportunity to stack more bitcoins in a lowered price. I think strategy should be a model for other bitcoiners as it would aid them about how they view every market dips.

[arwin100]

As Micheal saylor stated, they were down 50% when buying bitcoin in 2022, and nothing happened. Actually, they bought more.



Probably today the situation could be different, but the attitude could be the same.

With the different various market challenges that Michael Saylor has literally experienced in all the years he started the bitcoin accumulation journey it would be very unrealistic that he would fright to selling his bitcoins any moment soon regardless of how low bitcoin price might fall. Instead it would continue to be for him and opportunity to stack more bitcoins in a lowered price. I think strategy should be a model for other bitcoiners as it would aid them about how they view every market dips.

Look at this they had plans coming ahead if bad situation happen.



But since Bitcoin bounce back then reach at $90k above level then I think they provably won think about selling a little part of their holdings to cover up their debts. But for accumulating more Bitcoins? if you look at their post especially Saylor they are still bullish and thinking about buying more Bitcoin.

[JayJuanGee]

As Micheal saylor stated, they were down 50% when buying bitcoin in 2022, and nothing happened. Actually, they bought more.

Probably today the situation could be different, but the attitude could be the same.

With the different various market challenges that Michael Saylor has literally experienced in all the years he started the bitcoin accumulation journey it would be very unrealistic that he would fright to selling his bitcoins any moment soon regardless of how low bitcoin price might fall. Instead it would continue to be for him and opportunity to stack more bitcoins in a lowered price. I think strategy should be a model for other bitcoiners as it would aid them about how they view every market dips.

Look at this they had plans coming ahead if bad situation happen.

But since Bitcoin bounce back then reach at $90k above level then I think they provably won think about selling a little part of their holdings to cover up their debts. But for accumulating more Bitcoins? if you look at their post especially Saylor they are still bullish and thinking about buying more Bitcoin.

I am not sure about your suggestion that Saylor/MSTR has to do anything, even if the value of the bitcoin and the convertible debt were equal.. which based on the provided information would be at $12.5k, if bitcoin were to reach such prices. Why would they have to "cover up" their debts? 

Sure, MSTR has to service their debts until they are completely paid off, but if the BTC price goes lower than the amount of their debt, they still would not have to do anything about it, unless they were at a point that they were no longer able to service such debts, which comes off as a fairly BIG assumption.

[Ambatman]

But since Bitcoin bounce back then reach at $90k above level then I think they provably won think about selling a little part of their holdings to cover up their debts. But for accumulating more Bitcoins? if you look at their post especially Saylor they are still bullish and thinking about buying more Bitcoin.

Check out their debt in Microstrategy tracker
And you would see that their debt is below $10Billion.
Even if Bitcoin falls below $15K they can still finance their debt
Not to mention despite not being a core again, they are into data analysis and AI
Which can help finance interest on the loan.

Would saylor ever be Bearish? MSTR needs Bitcoin to be bullish.

[fillippone]

Even if Bitcoin falls below $15K they can still finance their debt

Yes, they can do that, but they would need to sell their bitcoin.
That would cause them a big loss, not in the economic form, but as the credibility of perma-hodler of bitcoins.

Not to mention despite not being a core again, they are into data analysis and AI

We both know the cashflows from the residual industrial part of Strategy are not sufficient to keep them buying bitcoin.