If Bitcoin breaks $100,000, everyone should thank MicroStrategy (MSTR is their stock), it is his personal wealth invested to secure off-exchange bond funds to address concerns about BTC volatility, packaging the unmanageable BTC into a form acceptable to the traditional market, using his own stock as a buffer to welcome traditional capital. His self-sacrifice to illuminate others is admirable.
Just as everyone was cheering for the new milestone of BTC, there were voices in the market questioning whether MSTR/BTC is the next LUNA/UST, and Hindenburg, a large company, is immediately shorting MSTR, causing MicroStrategy's stock price to drop more than 20% at one point, but it is strange that Hindenburg is long on BTC while shorting MSTR, forming a long-short hedge on MSTR and BTC, but MicroStrategy is a firm holder of BTC, how deep is the water here? We won't dig deeper, but MicroStrategy's move of stepping on the left foot and the right foot to climb the ladder: Buy BTC → Stock price rises → Borrow to buy more BTC → BTC rises → Stock price rises further → Borrow more debt → Buy more BTC → Stock price continues to rise → Issue and sell shares to buy more BTC → Stock price continues to rise, do you smell a "big thunder"? Let's look at the arguments of the two different views
Bullish on MSTR/BTC, won't be the next LUNA
View 1: MicroStrategy is not LUNA, its safety cushion is thick enough, and the debt repayment date is far away in 2027, the biggest threat is only the sell-off of ancient BTC whales
The heroes of the 40K-70K range are the BTC ETFs, and the heroes of the 70K-100K range are MicroStrategy (MSTR). MicroStrategy was originally a software company, with a lot of unrealized gains on its books, and it didn't want to invest in production anymore, 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 on its books to buy BTC, and started to leverage up. Its way of leveraging is off-exchange leverage, determined to borrow money through the issuance of corporate bonds to buy BTC.
The fundamental difference between it and LUNA is that LUNA and UST were printing each other, and the essence of UST was meaningless unbacked printing, barely maintained by a 20% fake interest rate.But MicroStrategy is essentially bottom-feeding + leverage, which is the standard of borrowing money to long, and it got the direction right.
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, daily 2% is a Ponzi scheme, annual 2% is a bank, quantitative change leads to qualitative change, MicroStrategy is not the only factor determining BTC, so MicroStrategy is definitely not LUNA.
MicroStrategy uses bonds and stock sales to increase its BTC holdings, and almost all of this money is used to continuously increase its BTC position, which is also the biggest driving force for BTC price to surge from $70,000 to $100,000. MicroStrategy's average cost of BTC is $49,874, which means it is now close to 100% in unrealized gains, which is a super thick safety cushion. MicroStrategy's leverage is off-exchange, and there is no forced liquidation mechanism. Angry creditors can at most convert their bonds into MSTR stocks at the designated time and angrily dump them into the market. Even if MSTR is dumped to zero, it still doesn't need to be forced to sell these BTCs, because the earliest debt it borrowed needs to be repaid by February 2027, more than 2 years away (probably the bull market will be over by then), the biggest variable may be whether those large ancient whales or nation-state level players cash out and dump the market, otherwise the current momentum will be hard to stop.
View 2: MSTR is a safe BTC mega long constructed with real business + clever financial tools
First, buying and holding BTC creates volatility in the stock price, which can then be used to issue convertible bonds (stock price volatility is required to issue convertible bonds, which are essentially bonds + call options). Then: BTC rises → stock price rises → can borrow at low interest (0.7%) → buy more BTC, a cycle repeating. Each time MSTR can raise a lot of money, and more and more, why? Because it promises a floor to the borrowers (receive the principal and 0.7% annual interest), and a huge upside (convert to stock if the stock price rises). There is no collateral, no forced liquidation clause. The software and real business can support the interest payments (traditional business cash flow of $75 million). The worst case is BTC crashing, then just lie and wait for BTC to come back, will it blow up? Very unlikely, the software business can pay the interest, and BTC is now floating $15 billion in gains, the debts are all long-term convertible bonds, no one can force liquidate it. Amazing! Think about the timing of each time MichaelSaylor pumps the price, at least now everyone in the crypto world should thank this mega long. MichaelSaylor sacrificed his own son, attracting a large amount of traditional external capital, using their money to forcibly lock in holding BTC (once they come in, they can't easily get out, they are bound to the crypto world), much better than those spot ETFs that come in and out every other day, so the more MSTR rises, the more traditional finance money it attracts, and the more money is reserved to pump BTC at key nodes in the future! If you made money on BTC, you should thank MichaelSaylor well.
View 3: The Trump effect-driven raging bull market will trigger a new asset flywheel
People who can read the trend naturally won't short MicroStrategy, especially at the start of a raging bull market, Hindenburg probably got on the bus too late, the money that came from near-zero interest rate financing to buy BTC with an annual yield of dozens, even a fool knows this is a sure win, plus Trump in this term is pro-crypto, forcing the Democratic Party's capital to flow back! No matter how you look at it, dollar-denominated assets will rise!
View 4: MSTR has opened up the channel for bonds to connect with BTC, call options
MSTR has opened up the channel for the bond market to connect with BTC. The bond attribute gives holders a guaranteed return, and the convertibility of the stock also gives them a forward call option on MSTR.
Questioning/Shorting MSTR/BTC, the lesson of LUNA
View 1: MSTR is the bond version of LUNA
Every bull market has a Terra $LUNA, this cycle is called MicroStrategy $MSTR. Make money, issue stocks to buy BTC, BTC price goes up, issue more stocks to raise funds, use the funds to continue buying BTC.Stepping on the left foot and the right foot to spiral upwards.
View 2: The Hunt family's silver crash is a lesson
I think MicroStrategy's approach is very similar to the Hunt family in the 1970s and 1980s
The Hunt family was a wealthy American family, who accidentally read a book that said silver was worth more than gold, so they decided to go all in. They borrowed money from Wall Street to buy silver, both spot and futures. They accumulated 12 million ounces of physical silver and 50 million ounces of futures, when the global annual production was only 20 million ounces. The supply-demand imbalance caused the silver price to rise 25 times.
The Hunt family became the world's largest borrower and the largest silver holder. The Fed couldn't stand it, started to throw ladders, raising silver futures margin 5 times, and raising the borrowing threshold, the Hunt family's capital chain broke, had to liquidate their assets to raise margin, but still got forcibly liquidated, went bankrupt. Now MicroStrategy is holding the same script, if everything goes smoothly, it will inevitably have a showdown with the Fed in the end, the arm can't twist the big leg, and the price will collapse. Blowing bubbles, it's better to burst early than late.
Viewpoint 3: Going long on MSTR is unwise, spot BTC is better
At this point in time, I will not buy MSTR. Even if BTC reaches $1 million after several cycles, and MSTR can acquire 1 million BTC, without discounting the rate, the value would only be $100 billion. Meanwhile, MSTR's market cap has already reached $90 billion quickly. Compared to $900 billion corresponding to $100 billion, with BTC rising from $90,000 to $1 million in the future, the space is the same. So I'd rather buy $90,000 BTC. Of course, MSTR may still outperform BTC in the upcoming bull market, but when BTC enters a bear market, MSTR will definitely be squeezed. And I'm aware that I don't have the ability to buy MSTR at a low price, nor do I have the ability to withdraw at a high price, so I'd better just hold BTC quietly.
Viewpoint 4: The Fed's tightening policy may lead to a double drop in MSTR/BTC
If the Fed tightens liquidity in the future, causing financing and debt issuance problems, creditors may concentrate on converting to equity and then massively sell to replenish liquidity, inevitably lowering the stock price. Insufficient capital inflow into BTC will lead to a downward spiral in the coin price.
Even worse, some have already fantasized about some conspiracy groups selling and shorting MSTR at relatively high levels, such as $150,000 or $200,000 for BTC, to achieve a double kill effect, just like the LUMA incident in the previous cycle, where traditional financial institutions were said to have killed it. Capital has no distinction between justice and evil, only for profits. For sufficient profits, it dares to take risks and even start a war.
Indecision is the nature of ordinary people. If there is certainty, there would not be crowds on the roof. Whether BTC can break $100,000 is no longer the focus of current discussion. What we look forward to more is perhaps the relaxed policy towards crypto by Trump after he officially takes office, and then more traditional institutions or off-exchange users can participate in the liquidity of crypto trading through formal channels. The bull run of BTC alone is not what crypto users hope for. What they want more is the great explosion of Web3 ecosystem applications driven by the incentive of capital liquidity, truly allowing technology to change traditional productivity and finance, making crypto a genuine new technology industry park, and realizing the beautiful vision of the new Web3 world.
