【MicroStrategy is not Luna, it has a much thicker safety cushion than Luna】
MicroStrategy was originally a software company with a lot of unrealized gains and no desire to invest in production, so it started to move away from the real to the virtual, and started buying BTC with its own money starting in 2020. Later, MicroStrategy used up all the money in its account and started leveraging. Its way of leveraging is off-exchange leverage, determined to borrow money by issuing corporate bonds to buy BTC. The fundamental difference between it and Luna is that Luna and UST printed each other, and essentially UST is a meaningless unanchored currency printing, barely maintained by a 20% false interest. But MicroStrategy is equivalent to bottom-up investment + leverage, which is the standard of borrowing money to go long, and it has bet the right direction. The penetration of BTC is far beyond UST, and MicroStrategy's impact on BTC is significantly lower than Luna on UST. It's a simple logic, as the saying goes, 2% daily is a Ponzi scheme, 2% annually is a bank, quantitative change leads to qualitative change, and MicroStrategy is not the only factor determining BTC, so MicroStrategy is definitely not Luna.【MicroStrategy increases its BTC holdings through bonds and stock sales】
In order to quickly raise funds, MicroStrategy has issued multiple debts in succession, totaling $5.7 billion (for everyone's intuitive understanding, this is equivalent to 1/15 of Microsoft's debt). And almost all of this money has been used to continuously increase its BTC holdings. Everyone has used on-exchange leverage before, you have to put BTC as collateral, and the exchange (and other users on the platform) will lend you money. But off-exchange leverage is different. All creditors in the world are only worried about one thing, that is, not repaying the debt. Without collateral, why are people willing to lend money to MicroStrategy off-exchange? MicroStrategy's bond issuance is very interesting, over the past few years, it has issued a type of convertible debt. This convertible bond is very interesting, let's give an example: Bondholders have the right to convert their bonds into MSTR stock, and this is divided into two stages: 1. Initial stage: 1.1 If the bond price falls >2%, the creditor can exercise the right to convert the bond into MSTR shares and sell them to recover the principal; 1.2 If the bond price is normal or even rises, the creditor can sell the bond on the secondary market at any time to recover the principal. 2. Later stage: When the bond is about to mature, the 2% rule no longer applies, and the bondholders can either take the cash and leave, or directly convert the bond into MSTR stock. Let's analyze this further, this is essentially a business that is basically risk-free for the creditor. · If BTC falls and MSTR has money, the creditor can get the cash back · If BTC falls and MSTR has no money, the creditor can still have the final bottom line, that is, convert to stocks and realize the principal · If BTC rises, MSTR will rise, and the creditor can give up the cash and get more stock returns In short, this is a transaction with a high lower limit and a very high upper limit, so MicroStrategy has successfully raised the money. Fortunately, or rather, loyally, MicroStrategy chose BTC. BTC has not let it down. As BTC has been soaring, the BTC that MicroStrategy accumulated early has risen with the tide. According to the ancient and classic stock principle, the more assets a company has, the higher its market value should be. So MicroStrategy's stock price has also soared to the sky. MicroStrategy's daily trading volume now exceeds that of the absolute blue-chip Nvidia this year. So MicroStrategy now has more choices. Now MicroStrategy not only relies on issuing bonds, but can also directly issue and sell stocks to raise money. Unlike many meme coins or BTC developers who have no minting authority, traditional companies can issue stocks after following the relevant procedures. Last week, BTC's rise from just over $80K to the current $98K is inseparable from MicroStrategy's help. Yes, MicroStrategy issued stocks and sold them for $4.6 billion. PS: A company with trading volume exceeding Nvidia naturally has this liquidity. Sometimes, you admire a company for making great profits, you need to respect its great courage. Unlike many crypto companies that sell and cash out immediately, MicroStrategy, as always, has a grand vision. MicroStrategy used the money raised from the stock sale to reinvest in BTC, pushing BTC to $98K. By now, you should have understood MicroStrategy's magic trick: Buy BTC → Stock price rises → Borrow more to buy more BTC → BTC rises → Stock price rises further → Borrow more debt → Buy more BTC → Stock price continues to rise → Issue and sell stocks to buy more BTC → Stock price continues to rise... Presented by the great magician MicroStrategy.【MicroStrategy's latest debt repayment date is in February 2027, we have at least 3 more years】
As long as there is a magician, there will be a time to expose the magic. Many MSTR shorts believe that the standard left side has already arrived, and even suspect that it has reached the Luna moment. But is that really the case? According to the latest statistics, MicroStrategy's average cost of BTC is $49,874, which means it is now close to 100% in unrealized gains, which is an extremely thick safety cushion. Let's assume the worst case scenario, even if BTC plummets 75% from here (which is almost impossible) and drops to $25,000, so what? MicroStrategy's debt is off-exchange leverage, and there is no margin call mechanism at all. The angry creditors can only convert their bonds into MSTR stocks at the designated time, and then angrily dump them into the market. Even if MSTR is dumped to zero, it still does not need to be forced to sell these BTCs, because the earliest debt MicroStrategy borrowed needs to be repaid is - surprisingly in February 2027. You see, this is not 2025, nor 2026, but Tom's 2027. That is to say, we have to wait until February 2027, and BTC has to crash, and if no one wants MicroStrategy's stock anymore, then MicroStrategy needs to sell some of its BTC in February. All in all, there are still more than 2 years to keep playing and dancing. This is the magic of off-exchange leverage. ---- Dividing line ---- You may ask, is there a possibility that MicroStrategy will be forced to sell BTC due to interest?The answer is still negative.
Due to the convertible bonds of Microstrategy, the creditors are generally making a profit, so its interest rate is quite low. For example, the one due in February 2027, the interest rate is actually 0%.
The creditors are purely greedy for MSTR's stocks.
And the interest rates of its subsequent bonds are also 0.625%, 0.825%, with only one at 2.25%, which has little impact, so there is no need to worry about its interest.
【The only soft threat to Microstrategy is the Bitcoin whales】
By now, Microstrategy has become intertwined with Bitcoin.
More companies are preparing to learn - the great manipulation of David Saylor, the "Copperfield" of the Bitcoin world.
For example, a listed Bitcoin mining company MARA has just issued $1 billion in Bitcoin convertible bonds, specifically to buy the dips.
So I think the shorts had better be cautious, if more people start to emulate Microstrategy, the momentum of Bitcoin will be like an unruly horse, after all, the upside is a complete vacuum.
So, now the biggest opponent of Microstrategy is only those ancient Bitcoin whales.
As many people predicted before, the Bitcoin held by retail investors has all been handed over, after all, there are too many opportunities, such as the meme trend, I don't believe everyone is empty-handed.
So there are only these whales in the market, as long as these whales don't move, this momentum will be hard to stop. If we're lucky enough, the whales and Microstrategy may form some subtle tacit understanding, enough to push Bitcoin to an even greater future.
This is also a big difference between Bitcoin and Ethereum: Satoshi Nakamoto theoretically owns nearly 1 million early mined Bitcoins, but has been silent to this day; while the Ethereum Foundation, for some reason, sometimes just wants to sell 100 ETH to test the liquidity.
Until the writing day of this article, Microstrategy has already made a profit of $15 billion, relying on loyalty and faith.
Since it is making money, it will increase its investment, it can no longer turn back, and more people will emulate it. According to the current momentum, 170K is the medium-term target for Bitcoin (not financial advice).
Of course, we are used to seeing conspiracy groups designing conspiracies in meme every day, occasionally seeing a real top-level positive conspiracy, I am truly in awe.
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