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

[Abelly]

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

And vice versa, I would say. Can anyone imagine Phong Le coming out after a board meeting and saying they are going to sell Bitcoin? The impact that would have on the market? Although in this two-way relationship, MSTR needs Bitcoin more than vice versa.

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

I seem to recall that last year's cash flow for the Business Intelligence side was actually negative. I can't find any information about it. Maybe this:

Why Strategy's Free Cash Flow was negative  and Net Income was also negative in 2024?

For me, 2026 is going to be a mystery, not only because of the price of Bitcoin itself, which at this point we have no idea where it's going, but also because of the impact it may have, especially on Strategy and the rest of the copycats.

Without wanting to paint too catastrophic a picture, let's assume that this year's price closes at the current level, around $90K, and next year closes slightly lower, not too much, around $80K. Although Strategy's model may continue to hold up, I don't think the same can be said for the much smaller companies that are copying the model. In addition, the Bitcoin yield would be greatly reduced.

As I said, I don't want to be a doomsayer, but after what has happened with the price of Bitcoin this year and with the price of MSTR, it is reasonable to consider these possible scenarios.

But Strategy doesn't have its Bitcoin held as collateral, and from what I have been reading, there are no price-based margin calls for them? That means they don't need to sell any Bitcoin, no?

They don't need to sell Bitcoin, they don't have a price below which they would have a margin call, but that's not the main issue right now. The main issue, as I was explaining, is whether the business model is sustainable. If the price of Bitcoin continues to grow at an annual average above the S&P 500, it will be, but below that, it won't, and this year both the price of Bitcoin and MSTR are well below the index.

You are right, the margin call is not the real risk here, the risk is hidden in the entire business model. If Bitcoin cannot beat the S&P 500 in the long run, then it is difficult for a highly leveraged Bitcoin strategy like MicroStrategy to be sustainable.
This year, it seems that both BTC and MSTR have underperformed the index. So the question is not where the price will go now, but whether this model can outperform the market in the long run.

[Free Market Capitalist]

You are right, the margin call is not the real risk here, the risk is hidden in the entire business model. If Bitcoin cannot beat the S&P 500 in the long run, then it is difficult for a highly leveraged Bitcoin strategy like MicroStrategy to be sustainable.
This year, it seems that both BTC and MSTR have underperformed the index. So the question is not where the price will go now, but whether this model can outperform the market in the long run.

I gave you a merit but it is not correct to say that they are highly leveraged. The issue lies in the business model, which was initially based on a 30% Bitcoin ARRR for the next 20 years, being higher now and lower at the end of that period. The crucial question here is whether they will be able to continue selling the business model in order to maintain sufficient demand to finance purchases and dividend payments. No one knows if this will be the case. Peter Schiff would say no, Saylor and Phong Lee would say yes, and I'm somewhere in between.

[Wind_FURY]

Shower thought - What if the market bottom for the next bearish cycle won't be reached until Chad Saylor/Strategy sells some of the Bitcoin from their vault.



I'm not trolling, merely a funny thought that came in my mind. Because if it is indeed truly the bear market, then the last sellers during a crash that traces the bottom is an institution, not plebs. 🤔

[fillippone]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:

“We can sell Bitcoin, and we would sell Bitcoin if we needed to, to fund our dividend payments below 1x mNAV…as we look at Bitcoin winter and see our mNAV compressing, my hope is our mNAV doesn’t go below one. But if it did, and we did not have other access to capital, we would sell Bitcoin. But that would almost be a last resort. That would be a last resort.”

So, in case mNAV turns below one, they can sell bitcoin to buy back more bitcoin buying back their own shares.

The complete analysis can be found here:

Strategy new ‘last resort’ to sell Bitcoin could trigger on 15% dip – sets $1.4B cash reserve contingency

Just remember that with the reserve fund they put in place, they are now safe for at least 21 months.

[Free Market Capitalist]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:...

It's not a change in narrative, at least not a new one. As far as I remember, it was said months ago when they presented the strategy according to which they were only going to do MSTR ATM below 1.5 mNAV in very specific cases, such as dividend payments. And I remember commenting on it.

That's another thing. That strategy was introduced when MSTR was already quite low in order to try to increase its price, but at least for now, it hasn't worked.

[abhiseshakana]

Change of narrative at Strategy.

So, in case mNAV turns below one, they can sell bitcoin to buy back more bitcoin buying back their own shares.

Just remember that with the reserve fund they put in place, they are now safe for at least 21 months.

As an entrepreneur, I see Strategy Inc. as having excellent resilience and risk management. In addition to preparing a liquidity exit strategy, they don't evaluate assets from a diamond hand and have disciplined capital management, as evidenced by their threshold (mNav <1), risk protocols, prioritization of obligations to investors, and fallback plans.

The term "selling as a last resort" demonstrates their long-term confidence in Bitcoin as a premium monetary asset, its role as a reserve asset, and its dominance in the 2024-2030 macroeconomic cycle. Companies that are bearish on BTC won't hold on until the last resort. Strategy releases BTC for buybacks not to weaken, but to strengthen its BTC holdings per share. This is similar to a halving mechanism, but in an equity structure, or what could be considered a deflationary action in stocks.
The simulation suggests that if the mNAV drops, they sell BTC and then buy back undervalued shares, which will result in a decrease in the circulating supply, an increase in BTC per share, and an increase in leveraged BTC exposure.

What's impressive is that Strategy Inc. doesn't react panicky to volatility and views Bitcoin as a long-term treasury discipline. They boldly seem to be saying we're prepared for a long bear market without having to sell Bitcoin. Unlike most companies that don't disclose the trigger for selling key assets, I see this strategic action as aimed at reducing tail risk, strengthening trust, simplifying valuation models, and enhancing the credibility of treasury management. This action makes Strategy Inc. appear more investible.

[ultrloa]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:

“We can sell Bitcoin, and we would sell Bitcoin if we needed to, to fund our dividend payments below 1x mNAV…as we look at Bitcoin winter and see our mNAV compressing, my hope is our mNAV doesn’t go below one. But if it did, and we did not have other access to capital, we would sell Bitcoin. But that would almost be a last resort. That would be a last resort.”

So, in case mNAV turns below one, they can sell bitcoin to buy back more bitcoin buying back their own shares.

The complete analysis can be found here:

Strategy new ‘last resort’ to sell Bitcoin could trigger on 15% dip – sets $1.4B cash reserve contingency

Just remember that with the reserve fund they put in place, they are now safe for at least 21 months.

I think not and its just a signal that even if Bitcoin winter is coming they are still capable to pay their dividends.

I think they are just trying to convince people that they are fine even if Bitcoin price drops more than what they didn't expect to happen.

But since they have balance to sell I guess they are pretty fine since they could just buy those what they sell once they have available funds to spend again. But hopefully they will not go down for more  since imagine the result of that selling action done. Many manipulators would provably use it to create panic and for sure Strategy don't want those situation to happen.

[JayJuanGee]

The news for this week is not the small amount of Bitcoin they have purchased, but rather the establishment of a cash reserve to pay a year's worth of dividends, which they have obtained from the common stock ATM, with a very low mNAV but which has ultimately produced dollar gains.

I think it's a good move to calm uncertainties and FUD, plus they plan to increase the reserve to two years of dividends.

This is certainly good news and important for gaining investor confidence. While MSTR mNAV is below 1, MicroStrategy's plan to keep dividends in reserve for two years should give investors some confidence. Since the strategy has set aside a large reserve of $1.44 billion from which investors will receive dividends for two years, I don't think we will see any buying of MicroStrategy this week, although it will be a small purchase.

I don't claim to be Mr. Smartie pants, yet I have made several posts on the topic that from my perspective, MSTR should have established systems in which they buy bitcoin no matter what every single week, so they have a budget for the buying of bitcoin, and yeah, even though I never mentioned the various dividends or products that have "guaranteed" or somewhat guaranteed payments, it would logically follow that those kinds of funds should be somewhat shored up, even though having reserves to pay several years of those kinds of expenses may well seem to go beyond efficient use of money, yet having enough funds to last at least through a whole cycle (which maybe even beyond 4 years) would seem within the realm of prudent.  

Of course, even though MSTR is a public company and they have quite a few disclosures of how they handle their finances, they might not necessarily share all of the exact particulars in regards to either execution or plans of what to do under various scenarios.. and many of us know that giving too many details can sometimes work to a disadvantage, especially when so many haters exist in the real world who would want to exploit whatever execution vulnerabilities might exist.

I find the timing a bit awkward on MSTR's current decision to create reserves since it comes off as defensive rather than proactive, even though it was likely a reasonable thing to do that should have already been done when BTC prices were higher and when there were various premiums rather than scrambling to accomplish during times that are not seeming as good for the company and/or the BTC price.. In other words, any proactive move would find these times as buying bitcoin rather than preserving and/or holding back dollars.

i am not going to be any kind of pro about buying on the way down and selling on the way up (which is my own personal practice), and surely when the BTC price goes down beyond expectations, I tend to run out of money to keep buying or at least, at some point, I have tended to have to end up having to reduce my BTC buy amount. .and I have gotten better and better at it through the years, yet a decently BIG company with so many bitcoin, legal and/or financial experts, they should be able to figure out way better systems than my own cashflow management systems, even if they are using way more sophisticated techniques than me, including their use of debt, credibility and other people money and/or confidence, which are things that individuals do not usually have to contend with.

merely servicing debts and servicing the various obligations that they put in place.

I wouldn't downplay all the debt they've accumulated due to bitcoin purchases and everything else, because it's significant and not merely a trivial thing to the company or to its investors.

Of course, I don't claim to know all of MSTR specifics, yet I know that many MSTR naysayers love to jump on the bandwagon of their ongoing impending doom, which is an exaggeration in the other direction which you have frequently been guilty of.

MSTR has frequently used other people's money and they have not overly encumbered themselves, and so the mere fact that they have some debts to service remains a pretty big so what in the whole scheme of things.

Yeah they own 650k bitcoin, and even if 1/5 of those BTC were encumbered in some kind of way, that would surely be manageable instead of presuming that MSTR is about to go under because they have some debts.  I doubt that MSTR is even close to 20% encumbered in their bitcoin holdings... yet the naysayers love to harp on unspecified implications that MSTR is overdoing its debt and blah blah blah.  Nonsense.^**

**  Edit: Of course, we could go by Fillippone's numbers and see that their debt service is about 10% of the value of the bitcoin holdings - which is higher than I had anticipated, but it is still a fairly reasonable number

Wall Street probably doesn't like to see a company take on debt to buy an extremely speculative asset like bitcoin

Who gives any shits what Wall Street likes or wants?

Yeah, we already know that "WallStreet" is not very excited about MSTR since MSTR is largely speculatively attacking wallstreet with its use of debt and its investment into bitcoin... Saylor tries to talk all nice and formal about what they are doing, but it continues to be a speculative attack.. so why would Wall Street like that?..

--at least when said asset has performed so poorly over a short-term interval as bitcoin has done recently.  

Of course, anyone who is against MSTR, they are going to go on the attack and even spread FUD when there are opportunities to try to use the negative momentum to their advantage.  What else is new?

In fact, remove that word 'probably'.  MSTR is getting hammered at the moment, and Saylor's announcement of a new cash reserve (oh, how I just had to chuckle when I read that news) seems like desperation and makes it look like he really doesn't know what the fuck he's doing.

Sure.. He could have probably done it at a better time, but so what?  You seem to just love any opportunity to say "I told you so," when the fact of the matter is that you are more full of shit in your own kind of opportunism to jump on the band wagon.

Many folks already knew or should have had known when MSTR is purposefully playing around with leverage than its performance is going to be levered too.. so guys who fuck around with leverage by buying and/or selling MSTR to try to take advantage of such leverage, they might profit greater than usual or they might get burnt greater than usual by getting themselves on the wrong side of the trade.

Maybe instead of getting  excited about MSTR, you should make sure that your own bitcoin holdings are in order?  Yes there can be negative ramifications to the whole bitcoin market based on various players within the bitcoin market, yet at the same time, do you have your own situation figured out.  Yes, I know that you are likely not playing MSTR.. (I don't blame you for that),.. but what about the underlying?  Have you been scared away from the underlying too?  There are plenty of folks who get distracted in their own bitcoin accumulating and/or maintenance strategy based on what is happening with others and even quasi-irrelevant metrics such as "sentiment".. The reliance on quasi-irrelevant metrics can contribute to your own failure/refusal to build and/or protect your own bitcoin situation.

My prediction is that in a year or so, that mNAV metric won't be in use ever again and will make people roll their eyes if perchance it's mentioned in the media somehow.  But I guess it all depends on bitcoin's price performance, just like it has since Saylor started this whole crypto treasury experiment.

Yes.. a lot of this does depend on bitcoin's price performance in the coming year or two...

Your ongoing bashing of Saylor and MSTR contributes to my own wondering if you even know how to discern value in the bitcoin space, since yeah, Saylor/MSTR has inspired a lot of copy cats, and he has been engaged in attempts to evangelize various corporate treasury followers for the past 5-ish years, and he even had a business oriented bitcoin conference in early 2021. yet it has been taking some time for both corporate treasuries and/or even governmental treasuries to lean more and more towards getting bitcoin on their balance sheets, and surely many of the corporate treasuries that are likely to do better are those who come to bitcoin with their own strong financials rather than ONLY relying on other people's money to buy bitcoin for themselves (and then now finding themselves in the red).. and sure they might still be able to survive, yet there are needs to get through downward and/or sideways BTC price moves rather than being completely dependent upon bitcoin's price to pump for their own survival and prosperity.

Of course, since around October 10 or soon thereafter, there have been a lot of folks proclaiming that bitcoin had entered into a bear market and that the top was in, even though the top had just happened on October 6, so it seems that there have been a lot of premature calls, which seems to be your own specialty, The Sceptical Chymist.  I have a hard time imagining that you are not within the "we're in a bear market" camp.. which also likely contributes to your own ongoing failures/refusals to sufficiently/adequately prepare your own bitcoin holdings for UP...  

Yeah, in recent times, it has worked out all fine and dandy to be preparing for down, since some decent amount of down (36% so far) has been happening in recent times, yet guys preparing for down (including yourself) still need to act upon their downity doom and gloom preparations instead of presuming more downity is coming, when such additional downity might not happen.  I personally don't claim to know with any amount of meaningful confidence, even though I have been frequently suggesting that there are still not enough negative facts to support those seemingly premature proclamations that bitcoin has transitioned into a bear market (rather than the more likely scenario that we are merely in a decently large price correction and still within a bull market).

[Ambatman]

MSTR is getting hammered at the moment, and Saylor's announcement of a new cash reserve (oh, how I just had to chuckle when I read that news) seems like desperation and makes it look like he really doesn't know what the fuck he's doing.

Well getting a Cash reserve means he isn't just blindly screaming Bitcoin is bull forever.
It's action are rational in my opinion though it contradicts with their ethos
But I guess to him survival comes first.
And if I'm not mistaken Phong stated already that if mnav falls below 1
There's nothing wrong with them selling some.
I think this is to prepare individuals mind Incase they do. Which is looking likely than it was few months ago.

Edited

How are the Ethereum treasury companies coping?
If I'm not mistaken Strategy has the lowest average cost of Bitcoin
And there are treasury companies that bought above $100K
And they haven't sold. Honestly haven't been tracking so could be wrong.

[JayJuanGee]

Bitcoin volities make it hard for us to be able to confidently hold Bitcoin as an income generating assets, such that we can depend on for passive income generation, since the possibility of having a downward price that keeps us stock for a while even though we have so much optimism and hope that Bitcoin will rather do more of the upward movement rather than a huge downspril.

On a personal transactional level, you might have to have a long term stash that you are building up and holding for 4-10 years or longer, and if you are going to spend from the other portion of your stash, then you might treat that portion as spend and replace.

So, yeah, it might not seem to make as much sense to keep bitcoin as a daily transactional value. since it might not make sense to transact in bitcoin unless you are also holding a long term stash so the transactional portion is not something that you are geting into and then getting out of merely for the sake of short-term transactions.

Bitcoin has the lightning network also in which value could be transacted on a shorter timeline.. yet a person may try to figure out some spend and replace systems in regards to the quatntity of BTC they are holding on lightning network wallets.

I don't completely know the solution, and governmental attempts to make accounting difficult is not helpful since normies using bitcoin would likely prefer if it was not separately taxed on smaller transactions and/or that there weren't necessarily any requirement to account for our bitcoin transactions - especially the relatively smaller level ones.

You are right, I think Prestongold is a trader, that's why he thinks it hard to confidently hold bitcoin as an income generating assets. I have lots of friends, even my dad has be holding his bitcoin for quite a lot of time that I can't even remember and he has been boasting of his gains.  What am pointing out is Bitcoin rewards people who  doesn't find it difficult to hold, people who think for long term goal not for short term transactions like Prestongold.

Even long term bitcoin holders can sometimes have their BTC holding conviction challenged when the BTC price drops 36% within less than 2 months. 

It can take years and years and years to both practice building of the BTC and holding through bad times, and surely many folks who hold through the bad times will also continue to buy through such bad times, even though surely several guys might have had been buying extra BTC all the way down on the dip, and perhaps have buys at various points on the way down, so some of the guys will just run out of extra money in order to buy more BTC, even though the BTC price keeps dipping, so at a certain point, they just have to HODL through the situation and perhaps just wait to see if more money comes in while the price is low or if the price might return to higher levels before they are able to buy more..

and yeah, many times, even the guys who have been buying a lot of bitcoin, they might feel that when they are continuing to buy bitcoin, they are buying relatively small amounts relative to the value of their overall bitcoin holdings, which is part of the reason that it can take a long time to build up holdings, especially for poor people who might not have a lot of money to work with in terms of their regular cashflows not necessarily adding up to a lot of discretionary income.

Bitcoin volities make it hard for us to be able to confidently hold Bitcoin as an income generating assets, such that we can depend on for passive income generation, since the possibility of having a downward price that keeps us stock for a while even though we have so much optimism and hope that Bitcoin will rather do more of the upward movement rather than a huge downspril.

On a personal transactional level, you might have to have a long term stash that you are building up and holding for 4-10 years or longer, and if you are going to spend from the other portion of your stash, then you might treat that portion as spend and replace.

So, yeah, it might not seem to make as much sense to keep bitcoin as a daily transactional value. since it might not make sense to transact in bitcoin unless you are also holding a long term stash so the transactional portion is not something that you are geting into and then getting out of merely for the sake of short-term transactions.

Bitcoin has the lightning network also in which value could be transacted on a shorter timeline.. yet a person may try to figure out some spend and replace systems in regards to the quatntity of BTC they are holding on lightning network wallets.

I don't completely know the solution, and governmental attempts to make accounting difficult is not helpful since normies using bitcoin would likely prefer if it was not separately taxed on smaller transactions and/or that there weren't necessarily any requirement to account for our bitcoin transactions - especially the relatively smaller level ones.

You are right, I think Prestongold is a trader, that's why he thinks it hard to confidently hold bitcoin as an income generating assets. I have lots of friends, even my dad has be holding his bitcoin for quite a lot of time that I can't even remember and he has been boasting of his gains.  What am pointing out is Bitcoin rewards people who  doesn't find it difficult to hold, people who think for long term goal not for short term transactions like Prestongold.

Bitcoin is volatile and cannot be trusted as a source of short-term income, thus most investors divide their investments into long-term savings and a smaller amount of spending. The long term holders tend to be the greatest beneficiaries as they do not respond to price movements in the short term. Bitcoin is usually rewarding to wait out, unlike in the case of traders. Everyday use is getting better with the tools such as the Lightning Network but with simpler regulations, adoption can increase.

Yes.  There are guys who fuck up and they try to live off of part of their bitcoin holdings before they have built up their bitcoin holdings to a sufficient enough size.. Those are not really investors.  They are traders, and yeah, it might work out for them, but they are quite likely ongoingly diluting their investment and exercising too much in ability to wait (lack of patience), and they probably would be better off to attempt to shore up their various forms of income to increase their discretionary income so that they can continue to buy bitcoin, and yeah, sometimes they might be able to cut some expenses too.

But yeah guys do prematurely dip into their holding, and that does not mean that they are engaging in good practices merely because they had been able to profit from their holdings at various points along the way up.

Look at you.  You have been registered on the forum as long as me, and if you had merely stayed concentrated on accumulating bitcoin and not fucking around with trying to trade it or cash out too much too soon, you could have had accumulated more than 17 BTC over the past nearly 12 years, with merely a $50 per week investment into bitcoin, which would have been merely $21k invested.  It is hard to beat those kinds of returns, and it is quite likely that you have way under performed even a modest bitcoin investment since you had been fucking around cashing out too many BTC too soon and presuming that you were engaged in some kind of a smart practice, when in fact you were ongoingly diluting your bitcoin exposure and probably putting yourself into a position in which you have way fewer bitcoin than you could have had if you had stayed focused on accumulating bitcoin and holding your bitcoin rather than cashing out too many too soon at various points along the way.

Of course, I don't know the specifics of your situation, yet from your description of what you have been doing (and supposedly most guys), you have likely way underperformed your potential based on your lack of staying focused on accumulating BTC and/or HODLing it.

If you say that you have either outperformed or even come close to performing equal to a buying and HODLing strategy, I will be quite shocked about your level of luck.. and surely with any bitcoin investment, we should not be structuring our practices around luck.. since that is gambling and not investing.

[edited out]

On the other hand, I keep hearing Saylor say that Bitcoin has appreciated 50% annually over the last five years, when, if I haven't miscalculated, we're looking at 35%.

Surely the CAGR can vary.. and yeah, around 5 years ago was when MSTR got into bitcoin, and surely they did not frontload their investment, but instead they were buying most of their BTC since the November 2024 Trump pump.. So their buying on the way up puts them into a bit of a worse situation, and so it will tend to take time to make up for various purchases that were made at high prices.. - those high prices brought their whole BTC holdings up in terms of the costs, and many normal people (or companies) might have had exercised strategies that were more measured and/or consistent, so even if they might have bought more bitcoin with the passage of time, many normal folks are limited by their own incomes and how much capital that they can get ahold of as compared with MSTR being quite skewed by their receipt of more money based on market sentiment and bitcoin price hype.

Surely some dumbass bitcoin naysayers and the other negative Nancies will make their measurements of bitcoin values based on selecting the 2021 top of the market and acting like any kind of fair and/or representative comparison can be reasonably made from starting at the top.

And of course, we can look at the 200-WMA.  We are $55,846 right now and in late 2020, soon after MSTR had started accumulating bitcoin we were at $7,352.  Of course, we would have been at even lower numbers with the 200-WMA in August 2020.  In any event, since late 2021 until now, That is 7.6x difference in the 200-WMA in the past 5 years.

It's true that they have structured the debt so as not to have problems even if the AARR drops significantly, but if we now enter a bear market and don't return to an ATH until after the next halving, who are they going to sell their business model to?

Surely if there is a bear market now, then there will need to be some rethinking of how to structure the various treasury companies.  For sure the business model makes sense for cashflowing companies, yet it might not make as much sense when high amounts of leverage are used (and it is not even clear yet, if MSTR might have gone a bit overboard in regards to the amount of leverage that they had chosen to use).

Saylor sold his model last year at its peak as being more profitable than anything else.

That is surely problematic to suggest that a leveraging strategy is going to be sustainable if it is started at the peak,since the fact of the matter with Saylor's earlier performance is that he was a bit ahead of the 2021 price rise and he was able to regroup in 2022-2024, too... Yet, the extent to the late 2024 buys don't make as much sense, even though surely when guys are throwing money at you for the purpose of buying bitcoin, maybe it becomes hard to resist in terms of buying bitcoin as it is going up and at or near the top.

At the moment, it is no longer the most profitable, with NVIDIA being the most profitable company. Give me a 2026 similar to this 2025 and MSTR is going to be less profitable than many other assets. Therefore, the shares are going to be more difficult to sell.

I am not saying that any of this will happen, or won't happen; I am simply proposing plausible scenarios, according to which it is reasonable to be skeptical.

Yep. it is possible that 2026 could be either a bear market or flat.. It is difficult to know, and you are correct that a lot of hype would end up leaving MSTR, under such a scenario, yet it still might not mean that MSTR is a bad investment for 2027 and beyond.. but yeah, there are short-term, medium-term and long-term scenarios, and the performance of the longer term scenarios could get altered  based on how real world short-term and medium-term had played out.  Each of us has to be careful in terms of our own allocations and/or how much we might put into various assets, whether bitcoin or some bitcoin derivative product and/or other places that we might elect to put our time, energies and value.

[edited out]

You are right, the margin call is not the real risk here, the risk is hidden in the entire business model. If Bitcoin cannot beat the S&P 500 in the long run, then it is difficult for a highly leveraged Bitcoin strategy like MicroStrategy to be sustainable.
This year, it seems that both BTC and MSTR have underperformed the index. So the question is not where the price will go now, but whether this model can outperform the market in the long run.

The reason that any of us buy bitcoin should likely relate to investment timelines that are 4-10 years or longer, and so we already know that from time to time (especially on a calendar year basis or some other randomly described time period) it might be argued that bitcoin is not performing good enough and various other nonsense proclamations about bitcoin's relative performance, and surely any leveraged product that also includes third-party execution issues, there is likely to be variance - which shows that it can be difficult to beat the plain ole regular performance of bitcoin, that will still have ups and downs along the way, and yeah, even bitcoin is not guaranteed to be successful, yet we still choose our allocation level, and historically, those people who have aggressively allocated to bitcoin have greatly outperformed the S&P and almost any other asset - and even NVIDIA is likely going to have difficulties beating bitcoin on a longer time trajectory (yet to be seen)...

One of the other amazing things about bitcoin, is that there was no need to be absolutely correct as long as we were directionally correct, and also we did not necessarily need any special permissions to enter bitcoin since bitcoin is open to everyone and anyone as long as they had discretionary income.. And, yeah, each person may still have to figure out how to source their bitcoin, which likely remains challenging, depending on geographical location and perhaps depending on the adoption rate in any particular place.. It likely helps to have more normies in our social (and commercial) circles who know about bitcoin and who have taken some actions to start to accumulate bitcoin and to self-custody some of their bitcoin.

[edited out]

No one knows if this will be the case. Peter Schiff would say no, Saylor and Phong Lee would say yes, and I'm somewhere in between.

Hahahahaha

Look at you.  Mr. Neutral.

I sent you a smerit for this level of chuckle-inspiration, whether your self-assessment statement is true or not.

Shower thought - What if the market bottom for the next bearish cycle won't be reached until Chad Saylor/Strategy sells some of the Bitcoin from their vault.

Look at you.

Coming in and ruinin dee moo.. .with your various out of touch fantasies - and in this case, the out-of-touchness has to do with granting so much of bitcoin's price moves to one actor - a common and ongoing myth, for sure.. .and these kinds of myths have frequently wrecked a lot of folks in terms of either getting them to sell too much too soon or getting them to insufficiently and inadequately prepare their own holdings for UP.

A side affect of ongoingly focusing on downs that may or may not happen is an inadequate and insufficient preparation for up.   Too bad for the many losers in this who either have no coins or have way fewer coins than they should have (and since you Wind_FURY  have been here since 2016, you shouldn't be in this low coiner / no coiner club., but you just seem to ongoingly enjoy remaining in such a club).

I'm not trolling, merely a funny thought that came in my mind.

Yes. 

The kinds of thoughts that folks who like having fun staying poor have.

Because if it is indeed truly the bear market, then the last sellers during a crash that traces the bottom is an institution, not plebs. 🤔

You think that plebs are smarter than institutions?

Sure plebs have opportunties to move quicker, yet they are not automatically smarter merely because they are more nimble.

Some plebs ongoingly fail/refuse to sufficiently prepare for up and they think that they know more than they do... so they end up screwing themselves so that they continue to stay plebs forever and ever and ever, since they are their own worst enemy.

Change of narrative at Strategy.
Phong Le, Strategy CEO, detailed when they can sell Bitcoins:

“We can sell Bitcoin, and we would sell Bitcoin if we needed to, to fund our dividend payments below 1x mNAV…as we look at Bitcoin winter and see our mNAV compressing, my hope is our mNAV doesn’t go below one. But if it did, and we did not have other access to capital, we would sell Bitcoin. But that would almost be a last resort. That would be a last resort.”

So, in case mNAV turns below one, they can sell bitcoin to buy back more bitcoin buying back their own shares.

The complete analysis can be found here:
Strategy new ‘last resort’ to sell Bitcoin could trigger on 15% dip – sets $1.4B cash reserve contingency

Just remember that with the reserve fund they put in place, they are now safe for at least 21 months.

I think not and its just a signal that even if Bitcoin winter is coming they are still capable to pay their dividends.
I think they are just trying to convince people that they are fine even if Bitcoin price drops more than what they didn't expect to happen.

But since they have balance to sell I guess they are pretty fine since they could just buy those what they sell once they have available funds to spend again. But hopefully they will not go down for more  since imagine the result of that selling action done. Many manipulators would provably use it to create panic and for sure Strategy don't want those situation to happen.

Surely, it might show that MSTR need to eat some humble pie from time to time, and surely from time to time, they are likely going to perform differently from the underlying.. even though the underlying should continue to guide its value.. and yeah if they are wreckless in terms of either borrowing against it or even not protecting themselves, then the market may well suss out those deficiencies and even suss out those deficiencies in irrational ways that might even involve punishing MSTR.

[fillippone]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:...

It's not a change in narrative, at least not a new one. As far as I remember, it was said months ago when they presented the strategy according to which they were only going to do MSTR ATM below 1.5 mNAV in very specific cases, such as dividend payments. And I remember commenting on it.

That's another thing. That strategy was introduced when MSTR was already quite low in order to try to increase its price, but at least for now, it hasn't worked.

What I wanted to say is that they never admitted there is a scenario where Strategy is allowed to sell Bitcoin (and with a good reason to do so).
Of course, they can do ATM when mNAV is below 1.5, and actually, this is exactly how they built their Dividend reserve: with ATM proceeds.

[Abelly]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:...

It's not a change in narrative, at least not a new one. As far as I remember, it was said months ago when they presented the strategy according to which they were only going to do MSTR ATM below 1.5 mNAV in very specific cases, such as dividend payments. And I remember commenting on it.

That's another thing. That strategy was introduced when MSTR was already quite low in order to try to increase its price, but at least for now, it hasn't worked.

This is nothing new, they said a few months ago that they would only do ATMs in special cases below 1.5 mNAV. Even then, there was pressure on MSTR prices, and they could not lift it with this strategy. These announcements do not have a big impact unless the market is strong.

[Free Market Capitalist]

Edited

How are the Ethereum treasury companies coping?

I don't know why you are asking me that. I don't care about shitcoins, so I couldn't care less about shitcoin treasury companies.

Hahahahaha

Look at you.  Mr. Neutral.

I sent you a smerit for this level of chuckle-inspiration, whether your self-assessment statement is true or not.

I don't know if you're saying that because I used to be bullish on Strategy, but recently I've become more skeptical. Not to the point where I now think it has a shitty business model. I haven't gone from one extreme to the other. But no matter how clear my ideas are, I'm always open to reality proving me wrong. And the reality is that Saylor sold his model as the most profitable in the world since 2020, outperforming investments in NVIDIA, stock indexes, gold, and everything else. But in a year when both Bitcoin and Strategy had everything going for them, the results have been disappointing. At the moment, it is no longer the most profitable asset since 2020, with NVIDIA taking the top spot, as can be seen on Strategy's own website. And if we only take 2025 into account, MSTR's performance is fucking shit compared to gold, NVIDIA, stock indexes, and even Bitcoin itself (the latter is more understandable if we think of it as a leverage play on it).

What I wanted to say is that they never admitted there is a scenario where Strategy is allowed to sell Bitcoin (and with a good reason to do so).
Of course, they can do ATM when mNAV is below 1.5, and actually, this is exactly how they built their Dividend reserve: with ATM proceeds.

It's made the headlines now but they did admit it before now, as I said before, I remember a presentation a few months ago where they said this, and I reflected it in this post, which was written before December.

[Wind_FURY]

Change of narrative at Strategy.

Phong Le, Strategy CEO, detailed when they can sell Bitcoins:

“We can sell Bitcoin, and we would sell Bitcoin if we needed to, to fund our dividend payments below 1x mNAV…as we look at Bitcoin winter and see our mNAV compressing, my hope is our mNAV doesn’t go below one. But if it did, and we did not have other access to capital, we would sell Bitcoin. But that would almost be a last resort. That would be a last resort.”

So, in case mNAV turns below one, they can sell bitcoin to buy back more bitcoin buying back their own shares.

The complete analysis can be found here:

Strategy new ‘last resort’ to sell Bitcoin could trigger on 15% dip – sets $1.4B cash reserve contingency

Just remember that with the reserve fund they put in place, they are now safe for at least 21 months.

If it's truly the early phases of the bear cycle, how high, do you believe, is the probability that Strategy would sell some of their Bitcoin to buy back their own stock? That would probably sort of low, no? Since Bitcoin bear cycles have never been longer than an average of 18 months.  

Do you believe their 21 month life-line will last them for the whole duration?

Plus the pivot to real Q.E. could happen in 2026, which will be good for all markets, legacy AND crypto.

[JayJuanGee]

Hahahahaha
Look at you.  Mr. Neutral.

I sent you a smerit for this level of chuckle-inspiration, whether your self-assessment statement is true or not.

I don't know if you're saying that because I used to be bullish on Strategy, but recently I've become more skeptical. Not to the point where I now think it has a shitty business model.

You picked two extremes and then said that you are somewhere in the middle - like 99% of the world's population, so it was funny because it wasn't really saying very much to be "somewhere" in the middle.

I haven't gone from one extreme to the other. But no matter how clear my ideas are, I'm always open to reality proving me wrong.

I was not even thinking about how you might have become less extreme on MSTR, even though I am thinking that MSTR had kind of gone overboard in a few of their statements, so yeah, it is likely turning some people off of them.

And the reality is that Saylor sold his model as the most profitable in the world since 2020, outperforming investments in NVIDIA, stock indexes, gold, and everything else.

Yes.  Some of his recent statements (and charts) were getting to be a bit too much, especially when he already known or should have had known that a lot of variation can exist, even if MSTR had some temporary period of being higher than everyone else.

But in a year when both Bitcoin and Strategy had everything going for them, the results have been disappointing. At the moment, it is no longer the most profitable asset since 2020, with NVIDIA taking the top spot, as can be seen on Strategy's own website. And if we only take 2025 into account, MSTR's performance is fucking shit compared to gold, NVIDIA, stock indexes, and even Bitcoin itself (the latter is more understandable if we think of it as a leverage play on it).

I am not a big fan of short term performance measures when it comes to something like bitcoin yet sure, maybe it is fair to make some of those shorter term assessments when it comes to something like MSTR - even though surely some guys had gotten into MSTR as a long term play, but they ended up buying it towards the top of its pairing against bitcoin when they were buying it with ideas of it being "superior to bitcoin", which is likely disappointing for them, even if they might have had been planning to hold it for a few cycles.  It becomes harder to justify if they got started at or near the top.. and even an inflated top at that..

[edited out].

If it's truly the early phases of the bear cycle, how high, do you believe, is the probability that Strategy would sell some of their Bitcoin to buy back their own stock? That would probably sort of low, no? Since Bitcoin bear cycles have never been longer than an average of 18 months.  

Do you believe their 21 month life-line will last them for the whole duration?
Plus the pivot to real Q.E. could happen in 2026, which will be good for all markets, legacy AND crypto.

You are assuming a lot Wind_FURY if you believe that you got bitcoin's price figured out for the next 18-ish months.

We have experienced a 36% price dip since our October 6th ATH - and so that is less than 2 months, yet you are assuming that we are in a bear market which implies that we are not going to experience any more ATHs, but instead additional lows in the next 18-ish months.

You might be your own worst enemy in regards to your own bitcoin stash (or lack of a stash) because you seem to be waiting for down that might not end up happening (including that we might have already gotten as much down at $80,537 that we are going to get for this round) and you are also failing/refuse to prepare for up that may well have odds that are around 50% or perhaps even more than 50%.. and even if such odds for up are ONLY in the ballpark of 50%, they likely deserve preparations that are more than 50%, since par tof the reason that any of us should be in bitcoin is to prepare for up within the greatest wealth transfer that man has ever experienced.,., and you are busy fucking around (and presuming) and preparing for down that might not happen..

[fillippone]

I think they are just trying to convince people that they are fine even if Bitcoin price drops more than what they didn't expect to happen.

They are trying to stop an attack on their listed instruments.
Recently, MSTR has been under a seller pressure that compressed mNAV from 1.50 to 1.15, and other hybrid instruments that have been heavily sold.
Hopefully, this will demonstrate speculators they have no hope pushing MSTR into a death spiral.

[rojan]

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

And vice versa, I would say. Can anyone imagine Phong Le coming out after a board meeting and saying they are going to sell Bitcoin? The impact that would have on the market? Although in this two-way relationship, MSTR needs Bitcoin more than vice versa.

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

I seem to recall that last year's cash flow for the Business Intelligence side was actually negative. I can't find any information about it. Maybe this:

Why Strategy's Free Cash Flow was negative  and Net Income was also negative in 2024?

For me, 2026 is going to be a mystery, not only because of the price of Bitcoin itself, which at this point we have no idea where it's going, but also because of the impact it may have, especially on Strategy and the rest of the copycats.

Without wanting to paint too catastrophic a picture, let's assume that this year's price closes at the current level, around $90K, and next year closes slightly lower, not too much, around $80K. Although Strategy's model may continue to hold up, I don't think the same can be said for the much smaller companies that are copying the model. In addition, the Bitcoin yield would be greatly reduced.

As I said, I don't want to be a doomsayer, but after what has happened with the price of Bitcoin this year and with the price of MSTR, it is reasonable to consider these possible scenarios.

But Strategy doesn't have its Bitcoin held as collateral, and from what I have been reading, there are no price-based margin calls for them? That means they don't need to sell any Bitcoin, no?

They don't need to sell Bitcoin, they don't have a price below which they would have a margin call, but that's not the main issue right now. The main issue, as I was explaining, is whether the business model is sustainable. If the price of Bitcoin continues to grow at an annual average above the S&P 500, it will be, but below that, it won't, and this year both the price of Bitcoin and MSTR are well below the index.

You are right, the margin call is not the real risk here, the risk is hidden in the entire business model. If Bitcoin cannot beat the S&P 500 in the long run, then it is difficult for a highly leveraged Bitcoin strategy like MicroStrategy to be sustainable.
This year, it seems that both BTC and MSTR have underperformed the index. So the question is not where the price will go now, but whether this model can outperform the market in the long run.

That's a good point. The real issue that MicroStrategy does not face is the immediate volatility or the use of margin, but the ability of a strategy based on Bitcoin to be stable outperforming the conventional metrics like the S&P 500. When there are several cycles in which Bitcoin underperforms major equity indices, then there is less reason to consider a leveraged corporate balance-sheet approach, however good the belief. However, a long-term asymmetric rise as many people anticipate Bitcoin to achieve eventually would mean that it is still possible that the MicroStrategy wager would appear to be a strategic decision instead of a reckless move. The question at this level is not so much about the price movements daily as long-term comparative performance.

[Free Market Capitalist]

They are trying to stop an attack on their listed instruments.
Recently, MSTR has been under a seller pressure that compressed mNAV from 1.50 to 1.15, and other hybrid instruments that have been heavily sold.
Hopefully, this will demonstrate speculators they have no hope pushing MSTR into a death spiral.

Well, that was recently. A year ago, it reached over 4 mNAV, with some companies such as Metaplantet or Naka (Nakamoto) having much higher ones. All of them have been compressed. This has not been exclusive to MSTR.

The time has come when I am considering unwinding my position in MSTR. Firstly, because I am now break even if I sell, and secondly, for the following reason.

I am going to propose two possible scenarios, which are not extreme and are plausible.

The first is that in the coming years until the next halving, the price of Bitcoin will rise. It does not need to be much, with an average of 20% per year, Strategy will be able to maintain its business model. This assumption would demonstrate that the cycles as we know them so far have changed.

The second scenario is to assume that the remainder of the cycle will behave like previous cycles, we reached a peak of $125K, which will not be exceeded until after the next halving, with the next couple of years seeing negative returns, as happened between November 2021 and November 2023. This is a plausible scenario, as I said, not at all catastrophic, and quite realistic, just like the first one. Let's say it goes down at an average of negative 20% a year,

How the hell is the business model going to be sustained in this second case?

Saylor has raised STRC's dividend again, which now stands at 10.75%. For starters, it's common knowledge in personal finance that there is a relationship between return and risk. The higher the potential return, the greater the risk. This is not only true in finance, but also in gambling and life in general. Betting on a single number in roulette has a higher potential return than betting on red or black, but also a much greater risk of losing everything.

But aside from that, STRC's dividend is based on Bitcoin appreciating by an average of 30% per year, which would allow them to pay approximately 10% and the other 20% would appreciate the common stock. But if the price of Bitcoin falls, that thesis does not hold up, and even less so if the dividend continues to rise to attract investors. In other words, will there come a time when it offers a 20% dividend on a preferred stock based on an asset that is losing 20% annually?

Since I don't know which of the two scenarios will occur, or even if they could be more extreme on one side or the other, I'm thinking of selling, but I'm going to give myself at least 24 more hours to think about it.

The thing is, right now I don't think we're going to see those crazy mNAVs we saw a year ago ever again. Maybe if things go well, Strategy will return to a 2 mNAV or so, but if we consider the other scenario, it could enter a downward spiral that looks bad.

Another thing that makes me think about this is that MSTR has an average Bitcoin purchase price of $75K. With that, the return it has obtained from Bitcoin at current prices is 25%. I have an S&P 500 investment fund, which I started at the same time that MSTR began buying Bitcoin, which has given me a much higher return than that. The problem with MSTR is that it attracts more capital when the price of Bitcoin is higher, so it buys a lot when the price is high and buys very little or nothing when it falls.

[Wind_FURY]

[edited out].

If it's truly the early phases of the bear cycle, how high, do you believe, is the probability that Strategy would sell some of their Bitcoin to buy back their own stock? That would probably sort of low, no? Since Bitcoin bear cycles have never been longer than an average of 18 months.  

Do you believe their 21 month life-line will last them for the whole duration?
Plus the pivot to real Q.E. could happen in 2026, which will be good for all markets, legacy AND crypto.

You are assuming a lot Wind_FURY if you believe that you got bitcoin's price figured out for the next 18-ish months.

We have experienced a 36% price dip since our October 6th ATH - and so that is less than 2 months, yet you are assuming that we are in a bear market which implies that we are not going to experience any more ATHs, but instead additional lows in the next 18-ish months.

You might be your own worst enemy in regards to your own bitcoin stash (or lack of a stash) because you seem to be waiting for down that might not end up happening (including that we might have already gotten as much down at $80,537 that we are going to get for this round) and you are also failing/refuse to prepare for up that may well have odds that are around 50% or perhaps even more than 50%.. and even if such odds for up are ONLY in the ballpark of 50%, they likely deserve preparations that are more than 50%, since par tof the reason that any of us should be in bitcoin is to prepare for up within the greatest wealth transfer that man has ever experienced.,., and you are busy fucking around (and presuming) and preparing for down that might not happen..

There's no need to react negatively, or to be annoyed by the question ser. I'm merely curious on what everyone's thoughts/insights/opinions are in the matter.

I personally believe that nothing will happen. Chad Saylor will continue to be like Bitcoin, a Honey Badger surviving the bear cycles and prosper during bull cycles. He will continue to keep buying like Bitcoin will continue chugging along producing block after block.

[JayJuanGee]

They are trying to stop an attack on their listed instruments.
Recently, MSTR has been under a seller pressure that compressed mNAV from 1.50 to 1.15, and other hybrid instruments that have been heavily sold.
Hopefully, this will demonstrate speculators they have no hope pushing MSTR into a death spiral.

Well, that was recently. A year ago, it reached over 4 mNAV, with some companies such as Metaplantet or Naka (Nakamoto) having much higher ones. All of them have been compressed. This has not been exclusive to MSTR.

The time has come when I am considering unwinding my position in MSTR. Firstly, because I am now break even if I sell, and secondly, for the following reason.

I am going to propose two possible scenarios, which are not extreme and are plausible.

The first is that in the coming years until the next halving, the price of Bitcoin will rise. It does not need to be much, with an average of 20% per year, Strategy will be able to maintain its business model. This assumption would demonstrate that the cycles as we know them so far have changed.

The second scenario is to assume that the remainder of the cycle will behave like previous cycles, we reached a peak of $125K, which will not be exceeded until after the next halving, with the next couple of years seeing negative returns, as happened between November 2021 and November 2023. This is a plausible scenario, as I said, not at all catastrophic, and quite realistic, just like the first one. Let's say it goes down at an average of negative 20% a year,

How the hell is the business model going to be sustained in this second case?

Saylor has raised STRC's dividend again, which now stands at 10.75%. For starters, it's common knowledge in personal finance that there is a relationship between return and risk. The higher the potential return, the greater the risk. This is not only true in finance, but also in gambling and life in general. Betting on a single number in roulette has a higher potential return than betting on red or black, but also a much greater risk of losing everything.

But aside from that, STRC's dividend is based on Bitcoin appreciating by an average of 30% per year, which would allow them to pay approximately 10% and the other 20% would appreciate the common stock. But if the price of Bitcoin falls, that thesis does not hold up, and even less so if the dividend continues to rise to attract investors. In other words, will there come a time when it offers a 20% dividend on a preferred stock based on an asset that is losing 20% annually?

Since I don't know which of the two scenarios will occur, or even if they could be more extreme on one side or the other, I'm thinking of selling, but I'm going to give myself at least 24 more hours to think about it.

The thing is, right now I don't think we're going to see those crazy mNAVs we saw a year ago ever again. Maybe if things go well, Strategy will return to a 2 mNAV or so, but if we consider the other scenario, it could enter a downward spiral that looks bad.

Another thing that makes me think about this is that MSTR has an average Bitcoin purchase price of $75K. With that, the return it has obtained from Bitcoin at current prices is 25%. I have an S&P 500 investment fund, which I started at the same time that MSTR began buying Bitcoin, which has given me a much higher return than that. The problem with MSTR is that it attracts more capital when the price of Bitcoin is higher, so it buys a lot when the price is high and buys very little or nothing when it falls.

I suppose that I don't really disagree with any of your analysis in any kind of strong way, since I have not been considering investing into MSTR and/or any of its products as compared with my ongoing happiness with the underlying...

So in that sense if I am happy with the underlying, then the only reason to play around with MSTR or any of its products would be to hedge my happiness.

You do seem to be doing the opposite of what a guy should do.. since this seems a better time to buy MSTR and its products.. but yeah, even myself, if I would have had gotten involved in any of their products, maybe all of my exposure added up would ONLY add up to 10% of the size of my bitcoin holdings.. so decisions become easier if we are dealing with smaller parts and perhaps hedging rather than putting a lot of exposure into derivative products rather than the real deal..   Do you have higher than 10% exposure to MSTR and MSTR products as compared with your bitcoin holdings?

[edited out].

There's no need to react negatively, or to be annoyed by the question ser. I'm merely curious on what everyone's thoughts/insights/opinions are in the matter.

I personally believe that nothing will happen. Chad Saylor will continue to be like Bitcoin, a Honey Badger surviving the bear cycles and prosper during bull cycles. He will continue to keep buying like Bitcoin will continue chugging along producing block after block.

I don't have any problem with my already existing response.

Right now, you seem to be changing your tune, and saying that you did not really mean what you said.  I already responded to what I read the first time, which made it sound like you have it all figured out, and yeah, maybe you don't know how to frame your questions in such a way that you don't come off as a troll. 

You are now trying to suggest that you don't believe in such negative scenario as you had earlier posed, yet you had wanted to pose such a negative scenario anyhow and ask: "what if?"