A lot of people are critizing MSTR & Michael Saylor for his Bitcoin activity and it needs to be cleared up on how serious this is for MSTR.
If Bitcoin continues on its trajectory, MSTR will be in the top 10 companies by market cap in the SP500.
1. Spot ETF's cannot be added to SP500 Index funds. 2. Spot ETF's cannot be levered on the base price. 3. MSTR shortly will be in the SP500 index funds meaning global allocation to the standard funds will be buying up MSTR shares that MSTR in return will be using to buy Bitcoin and apply low corporate leverage debt.
SP500 Index Fund > MSTR > Debt/Bitcoin > Bitcoin scarcity increased > Spot ETF rises, increasing the MSTR total value.
Large funds can park money with MSTR that MSTR then uses extremely low corporate leverage to accumulate more Bitcoin per capital invested that they then hold and adjust shares accordingly / buy back shares.
At the end of this bull market Michael Saylor can also make a decision to get debt against a portion of his Bitcoin in the company balance sheet and use his operating income / to fund and secure the debt.
Spot ETF's are extremely important including Futures. MSTR? also very important in what he is doing.
MSTR is not a Spot ETF it's a company with a structure to generate returns like Berkshire Hathaway, there is risk involved but Saylor has taken a route that gives MSTR a strong resilience to bear markets and stronger upside to bull markets. This might have not worked if there was too much Bitcoin supply to purchase meaning Spot ETF's out weigh MSTR.
But MSTR has more than enough for what it needs to become one of the largest investment company in the world.
MSTR on this trajectory is worth north of $20,000 per share.
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Monitoring this as of today there is still a large hedge fund trapped with Si (Short Interest) on MSTR roughly 17.65% of outstanding shares.
This is barely dropped since the gapping of the MSTR price between $448-$1,246 putting the cover cost somewhere between $1-3B depending of their source of collateral.
It's clear to me that they have to either buy MSTR Shares + Call Options or fire sale another asset to get out of this situation, personally I think if they wanted to exit they would have already done so seeing the Spot ETF Inflows on BTC, Someone is stuck.
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MSTR Currently Rank +299
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MSTR Currently Rank 283 ^7 *notes* people seem to be having a disconnect thinking the total value of MSTR's market cap is equal the spot Bitcoin they have. This is not how market caps work.
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MSTR Currently Rank 278
Current Short Interest Cover has grown to $5,925,000,000 Might need to bust out that "Fubar" phrase as I don't think Bitcoiners look to be selling any MSTR shares.
I'm literally salivating ....Deliciousness i need to buy more shares!!!!! Btw if BItcoin goes to 900k I wonder where MSTR will be any thoughts?
FederalXBT
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@PicardsBoilerRoom, north of $18,000. As MSTR uses more convertible debt to buy Bitcoin and pay interest to investors more people will go the MSTR route especially if he can offer 2-3x low leverage on the holdings. (possible agreement too that share purchases are apart of this agreement)
Thus MSTR will be added to the SP500 index and be allocated more weighted market cap as it increase thus allowing him to take on more convertible debt.
If Bitcoin keeps up at this rate with ETF Inflows, well MSTR will be in the top 15 US companies.
MSTR Market cap will always be trading at a multiple higher than the actual underlying AUM as its a stock not a spot ETF.
We've never had a company plug low interest rate corporate debt into a gold rush using the fiat system against itself + at the same time a lot of large buyers or one larger one loaded up on shorts betting MSTR to go down so things can get interesting.
PicardsBoilerRoom
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@FederalXBT, Thanks for the input might as well share what i found on stocktwits. If BTC hits 150k EST MSTR price $9,281. BTC @ 500k EST MSTR price $32,982. BTC @ 750k EST MSTR price $49,912. BTC @ 1,000,000.00 MSTR @ $66,840. Assumes MSTR owns 193,000.00 BTC. MSTR will buy more BTC in the future. BTC price in 2040 4.6 million as per invest answers (on youtube) projection!
FederalXBT
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@PicardsBoilerRoom, There is just a lot a variables with MSTR and to what multiple it will trade at vs their BTC holdings + short interest how long it remains being an active company with projects too.
And I also don't think there is an outcome where BTC takes 2040 to hit 4.6 million due to market caps can't calculate an asset with a known supply like Bitcoin is today, its never been done so there's errors. 4.6M at 19.7M supply gives it a market cap of 90.4T, but I've only ever seen a max of 4.2m coins circulating and trading in the market of the entire history of bitcoin meaning the supply is much less in reality, 4.2M traded supply (active supply) would give BTC a market cap of 19.3T at 4.6m
If we could somehow know the entire supply of unknown gold one earth, the market cap of Gold could be in the quadrillions as an analogy :)
filotej
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if bitcoin is going up forever Laura, then MSTR is..... too
stingBee
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💩 I like the stock.
binglis34
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Excellent explanation I agree 💯 I doubt we get above 5k this cycle though...if that
FederalXBT
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@binglis34, MSTR will over shoot the BTC price correlation due to the setup + the long term debt that can be continuedly rolled to future profits for MSTR its like 30Y mortgages on Bitcoin. MSTR is a mortgage provider for BTC. $100,000 could easily put MSTR over $5,000 my chart is just showing the correlation of both moving in sync but MSTR outperforms BTC due to the convertible debt + has limited downside due to the long term debt offsetting the need for BTC to perform in a short amount of time to cover any short term loses :).
Dannnnyyy
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so looking at end of march, where do you see MSTR closing at? and are you planning on holding this short or long term?
FederalXBT
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@Dannnnyyy, Its all dependant on Bitcoin and Bitcoin will continue to climb month after month until supply shock and so will MSTR outperform Bitcoin by a factor of 2. Personally I see MSTR as the new Berkshire Hathaway where a single share will be impossible for most people to own and it will index the Bitcoin economy so.. would I hold MSTR over Spot BTC long term? I wouldn't hate it but also MSTR would not be my only exposure to Bitcoin.
MSTR is either going to be a generic fund or it will be the largest Bitcoin non ETF fund in the world as anyone trying to replicate MSTR has to buy more BTC than Michael Saylor and buying BTC inherently increases the MSTR (competition value), so far I don't see any way MSTR can lose.