MSTR Status Report

One of my working hypothesis for why Bitcoin sentiment has been so bi-polar this cycle is the role MSTR has played in attracting speculative interest, and we're overdue a status report update.

G’day Folks,

By far, one of the most interesting pieces of work I completed last year was my research into MicroStrategy in The Infinite Money Glitch. For any readers who may have missed that report, I would strongly encourage you to review it prior to digging into today’s piece, as I will use a lot of the concepts we discussed as assumed knowledge.

MicroStrategy has since re-branded to Strategy, and appears to be restarting their issuance of convertible debt issuance, with the latest announcement of a $2.0B raise at a coupon of 0%.

Yes, that is correct, Strategy is currently raising $2.0B with a zero interest coupon to buy more Bitcoin. The market is still giving Saylor free money.

Wrapping your head around this company is no small feat, and I am the first to admit that I know more about it than the average punter, and yet I still have more questions than answers (making it an interesting intellectual puzzle to solve).

What I do know is:

• The product that Strategy sells is excess volatility over and above that of the Bitcoin it holds on balance.

• This excess volatility is packaged up into securities (bonds and equity) and sold to various pools of capital on Wall St, most of whom have a USD denominated return profile they need to satisfy.

• MSTR’s short-term volatility has declined quite significantly, and the stock is now trading -45% below its all-time-high.

• Almost 70% of Strategy’s USD invested in Bitcoin has been allocated within our current trading range, which is quite the statistic.

• A lot of retail investors appear to have been burned by this trade, and are severely underwater. For evidence, look no further than the recent posts in the Irresponsibly Long MSTR twitter community.

In today’s post, I want to provide a status update on Strategy and its Bitcoin holdings. I will focus on some of the risks that may result if the firm continues to buy even more Bitcoin at increasingly high prices.

Live Chart

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📈 Reminder: you can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.

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