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

[Donneski]

I think that’s probably where the real drawback is. Once taxes start eating into the returns, the wrapper becomes less attractive. At that point some investors might just prefer direct exposure instead of adding another layer in between.

You could have bothered to read the explanation I gave about this in the post before yours. Double taxation is easily avoidable.

I actually missed that part of your explanation while responding to @Fillippone, especially the point about the W-8BEN and how the withholding can be offset through the tax treaty.

What I meant was more from a general perspective, that once taxes and additional wrappers start adding complexity, some investors tend to lean toward direct exposure instead. But you're right that in this case the tax impact can be mitigated more than people usually assume.

[SeriouslyGiveaway]

Oh, you've got that right.  I've mentioned this in a few posts in the distant past, but does anyone remember the story of Long Term Capital Management?

I certainly don't think Strategy's leverage is going to endanger the global economy, but I have to wonder who's manning the risk management desk there.  One other thing that's been on my mind every time I see something about Strategy/Saylor is how much bitcoin is enough for treasury purposes?  I don't even think that's the goal anymore (and somebody tell me if that's been outright stated publicly), because Strategy has morphed from a software company into what amounts to a bitcoin holding company.  They might as well be a lottery ticket holding company, and the risk they've taken on with all of the BTC is enormous.

Bitcoin market is still very smaller than traditional markets so anything happens with Bitcoin market will not affect the global economy. Bitcoin market is small enough to even be affected by traditional markets that react with sensitive news first. So anything happens with Strategy will not endanger global economy as this company is smaller than many companies in traditional markets too.

I thought the same like you did, because Strategy has accumulated and leveraged their Bitcoin portfolio like there is no risk management board in their company or it is possible a single-man-handed risk management board with only Michael Saylor there. Whatever that board exists or does not exist, and how it is designed and operated, we have all witnessed their dangerous over leverage speculation with Bitcoin.

Buying Bitcoin for long term holding is only investment if the capital used is a safe one, that is not what Strategy has practiced in recent years. They have changed from investor to speculator.

But as I've said before, Michael Saylor will go down in bitcoin history either as a visionary who made his shareholders very rich or a reckless idiot and a case study for Harvard MBAs on speculative mania and its influence on corporate America.  That history obviously has yet to be written, and though I'm not a fan of Saylor I'm not hoping he fails, as that would mean something really bad happened to bitcoin.  Someone pass the popcorn?

He will go do in history textbook, one way or another, as there is no something in between for their hyper leverage speculation with money without proper risk management like this.

[fillippone]

Strategy performed their 102nd Bitcoin purchase:

[Free Market Capitalist]

Strategy performed their 102nd Bitcoin purchase:

It's a good buy given the current price of Bitcoin. I would bet that he has surprised the market, as it breaks with Strategy's tendency to make large purchases when the price is high and small ones in a bear market.

[LFC_Bitcoin]

Strategy performed their 102nd Bitcoin purchase:

Really hope he continues at this pace, he’s hoovering up effectively an entire weeks worth of newly mined coins.

I saw this 5 mins ago -

@BitcoinMagazine
JUST IN: It's now estimated that Michael Saylor's Strategy bought 1,360 BTC today via STRC, a new daily record 🤯 🚀

https://x.com/bitcoinmagazine/status/2031099811605119253

[fillippone]

@BitcoinMagazine
JUST IN: It's now estimated that Michael Saylor's Strategy bought 1,360 BTC today via STRC, a new daily record 🤯 🚀

I saw a similar tweet, and I am really curious about the meaning of this: how can be they so sure about the amount blog Bitcoin they bought?
Is there some sort of real time statistics over the STRC issue?

[LFC_Bitcoin]

I saw a similar tweet, and I am really curious about the meaning of this: how can be they so sure about the amount blog Bitcoin they bought?
Is there some sort of real time statistics over the STRC issue?

I don’t know to be honest, mate. What he is doing confuses me but buying so many coins must be good for us mid to long term.

Perhaps this account might be useful to you - https://x.com/strc_live

[Ambatman]

I saw a similar tweet, and I am really curious about the meaning of this: how can be they so sure about the amount blog Bitcoin they bought?
Is there some sort of real time statistics over the STRC issue?

Strategy wallet address aren't public though arkham claim to know more than 85%
Data on it are usually gotten via strategy in accordance to their Form 8 K.
The only real time statistics is price and trading volume
Which many use to estimate amount issued
Though it's more accurate to follow that mentioned by strategy
And on their holdings, investors choose to trust them though I still don't know why he doesn't use a ZKP
I'm still a little skeptical.

I don’t know to be honest, mate. What he is doing confuses me but buying so many coins must be good for us mid to long term.

Well the company is built around holding and buying Bitcoin
And despite all these market still performs sub-par
It just shows that their purchases just reduce the amount in circulation
Not guarantee it would to an increment since its usually OTC.

[Free Market Capitalist]

Well the company is built around holding and buying Bitcoin
And despite all these market still performs sub-par
It just shows that their purchases just reduce the amount in circulation

That's right, one of the problems is that it only applies buying pressure, and when it has bought those bitcoins, it simply takes them out of circulation, which reduces the trading volume and means that the price can be driven down with less money. That's without even getting into derivatives such as options, covered calls, etc. 

Another thing that blows my mind is how enthusiastic people are about STRC, which doesn't stand up to simple mathematical analysis. People just swallow and repeat what Saylor says about it being a money glitch. It seems more like the worship of a saint than an analysis of the asset, which is what any sensible person should do if they are considering buying it. At the moment, it seems that with an 11.5% dividend, he has managed to keep the price fairly stable at around $100 and be able to ATM it. But considering that every $100 sold generates $11.5 per year in cash requirements to pay dividends, and that the way to pay dividends is to get more people to buy STRC (or continue diluting MSTR, but they want to reduce this), it is clear what the system is called, and it is not infinite money glitch but a much more classic name.

[Donneski]

That's right, one of the problems is that it only applies buying pressure, and when it has bought those bitcoins, it simply takes them out of circulation, which reduces the trading volume and means that the price can be driven down with less money.

That's an interesting way to look at it. Lower liquidity can definitely make the market easier to move with less capital. At the same time, that can also work in the opposite direction if strong demand comes back.

Another thing that blows my mind is how enthusiastic people are about STRC, which doesn't stand up to simple mathematical analysis. People just swallow and repeat what Saylor says about it being a money glitch.

I think part of that enthusiasm comes from the scale of the bet behind it. When a company restructures its balance sheet around Bitcoin, it naturally draws attention. But I agree that in the end the numbers and structure matter more than the narrative.

[JayJuanGee]

Well the company is built around holding and buying Bitcoin
And despite all these market still performs sub-par
It just shows that their purchases just reduce the amount in circulation

That's right, one of the problems is that it only applies buying pressure, and when it has bought those bitcoins, it simply takes them out of circulation, which reduces the trading volume and means that the price can be driven down with less money. That's without even getting into derivatives such as options, covered calls, etc. 

Another thing that blows my mind is how enthusiastic people are about STRC, which doesn't stand up to simple mathematical analysis. People just swallow and repeat what Saylor says about it being a money glitch. It seems more like the worship of a saint than an analysis of the asset, which is what any sensible person should do if they are considering buying it. At the moment, it seems that with an 11.5% dividend, he has managed to keep the price fairly stable at around $100 and be able to ATM it. But considering that every $100 sold generates $11.5 per year in cash requirements to pay dividends, and that the way to pay dividends is to get more people to buy STRC (or continue diluting MSTR, but they want to reduce this), it is clear what the system is called, and it is not infinite money glitch but a much more classic name.

I might be missing something, yet from my somewhat superficial perspective, MSTR is ONLY a "Ponzi Scheme" if they actually were to not have the coins that they claim to have, which is possible, since they seem to want to ongoingly play those proof of reserve cards close to the chest.  They seem to be smart enough to know the issue (and problem) of rehypothication, so there could be ways that they could get assurances that their coins are not being moved without permission, even though even entities holding so many coins could be entering into various kinds of debt relationships based on their assets (in this case bitcoin) under management - even if Saylor/MSTR might have had chosen to split their coins amongst a variety of custodians... and surely might also be engaging in some kinds of multi-signature arrangements between custodians (including representatives within MSTR as additional signatories). 

Another conspiracy theory possibility is that MSTR has all the coins that they claim to have, yet at the same time, they have some other disingenuine objectives (why else would they seem to be so cozy with uncle Sam?) of getting bought out (or acquired) by the US Gov (or in some other way serving as a privatized branch of the US Gov).  This also ties in with conspiracy theories that suggest that they (MSTR) is being allowed to engage in a speculative attack on the dollar in clear and plain sight... and they are not being prosecuted for their seemingly ongoingly outrageous speculative attack.

[Ambatman]

and it is not infinite money glitch but a much more classic name.

Infinite money glitch can only be rehypothecation

I might be missing something, yet from my somewhat superficial perspective, MSTR is ONLY a "Ponzi Scheme" if they actually were to not have the coins that they claim to have, which is possible, since they seem to want to ongoingly play those proof of reserve cards close to the chest.

He expects people to just trust what they say
When Bitcoin is literally Don't trust. Verify.
I would always have this thought at the back of my mind
That there's some level of rehypothecation
Except he chooses to use ZKP
A method he's aware of but chose not to implement.

[Curious T]

One other thing that's been on my mind every time I see something about Strategy/Saylor is how much bitcoin is enough for treasury purposes?  I don't even think that's the goal anymore (and somebody tell me if that's been outright stated publicly),

I have thought about this too. They currently hold over 730k BTC. What exactly is the goal? Is it 1 million or 2 million? Because I refuse to believe they are just buying with no solid plan.

because Strategy has morphed from a software company into what amounts to a bitcoin holding company.  They might as well be a lottery ticket holding company, and the risk they've taken on with all of the BTC is enormous.

It is still a software company, though, just not overseen by Michael Saylor. They still do their original business. 

But as I've said before, Michael Saylor will go down in bitcoin history either as a visionary who made his shareholders very rich or a reckless idiot and a case study for Harvard MBAs on speculative mania and its influence on corporate America. 

The saying "the difference between a genius and a madman is in the result" comes to mind. If it works out great, then he is a genius; if it fails, he is a madman who couldn't see what everyone else saw coming.

[BlackBoss_]

I don’t know to be honest, mate. What he is doing confuses me but buying so many coins must be good for us mid to long term.

Perhaps this account might be useful to you - https://x.com/strc_live

As a summary for STRC, Phong Le posted this chart.

$STRC is more stable than MSTR, bitcoin, gold, the S&P 500, and investment grade bonds.

Some more information about STRC from David Hudman.

[Free Market Capitalist]

Another thing that blows my mind is how enthusiastic people are about STRC, which doesn't stand up to simple mathematical analysis. People just swallow and repeat what Saylor says about it being a money glitch. It seems more like the worship of a saint than an analysis of the asset, which is what any sensible person should do if they are considering buying it. At the moment, it seems that with an 11.5% dividend, he has managed to keep the price fairly stable at around $100 and be able to ATM it. But considering that every $100 sold generates $11.5 per year in cash requirements to pay dividends, and that the way to pay dividends is to get more people to buy STRC (or continue diluting MSTR, but they want to reduce this), it is clear what the system is called, and it is not infinite money glitch but a much more classic name.

I might be missing something, yet from my somewhat superficial perspective, MSTR is ONLY a "Ponzi Scheme" if they actually were to not have the coins that they claim to have...

Yes you are actually missing that I was talking about STRC, not MSTR. MSTR does not create cash payment requirements every time they sell a share through ATM, STRC does. MSTR does not have a variable dividend that has had to be raised to stratospheric levels for people to buy it, but STRC does. MSTR does not have a dividend that is being paid with money contributed by new investors to pay those who already own the stock, STRC does (they have a cash reserve, but that reserve remains untouched.)

[fillippone]

Perhaps this account might be useful to you - https://x.com/strc_live

Wow, this was very interesting!

I wasn't aware of this account, so you are saying to me i can put a floor on the announcement of bitcoin buys for Monday?

Another interesting feat is this one:




I didn't think about STRC being undercollateralised, but it actually makes sense.

[Free Market Capitalist]

I didn't think about STRC being undercollateralised, but it actually makes sense.

 

They sell it as overcollateralized 5 to 1.

Each share of STRC is overcollateralized with bitcoin at a ratio of roughly 5-to-1, meaning that for every dollar of STRC issued, Strategy holds approximately five dollars’ worth of $BTC.

[fillippone]

I didn't think about STRC being undercollateralised, but it actually makes sense.

 

They sell it as overcollateralized 5 to 1.

Each share of STRC is overcollateralized with bitcoin at a ratio of roughly 5-to-1, meaning that for every dollar of STRC issued, Strategy holds approximately five dollars’ worth of $BTC.

I don’t understand then how to read the above graph then. If STRC is over collateralised I would expect a low, or even negative premium to bitcoin.

[Abuobyda218]

Michael Saylor's Bitcoin strategic reserve company MicroStrategy has surpassed American giant BOA (Bank Of America) in trading volume to become the 21st largest institution in America.

[CageMabok]

Michael Saylor's Bitcoin strategic reserve company MicroStrategy has surpassed American giant BOA (Bank Of America) in trading volume to become the 21st largest institution in America.

This proves that MicroStrategy remains focused on the path they have long pursued and is truly aligning with Michael Saylor's vision. He is someone who loves Bitcoin more than anything, and continues to invest and purchase Bitcoin under any circumstances. So it's no surprise that his company has surpassed Bank of America in trading volume and become the largest institution, although not the top-ranked institution. However, seeing him still quite happy to buy and hold Bitcoin, it seems that the enthusiasm of many people to continue doing so will continue to be felt in Bitcoin.