Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ - page 17. (Read 21343 times)

Saylor is truly a genius, he went without a hitch, $MSTX saw $22m in volume today, which may be a Day One record for a leveraged ETF. Even the second day jumped $34m.

Not for the Faint of heart:

Defiance Debuts Leveraged 1.75x MicroStrategy ETF


Apparently, they wanted a 2x exposure, but the SEC deemed it too high.

Fun thing, this is safer play to MSTR than putting 1.75 times the capital, du to a short convexity Payoff.

Defiance ETFs has unveiled the Defiance Daily Target 1.75x Long MSTR ETF (MSTX), the first single-stock leveraged ETF tracking MicroStrategy, the technology company known for its massive bitcoin holdings.

The MSTX fund seeks to deliver 1.75 times the daily percentage change in MicroStrategy’s share price
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Although it is good news, there does not seem to be a change in the anti-Bitcoin policies of Norway.


https://x.com/patrick_saner/status/1823729882016440744

🇳🇴 Norwegian Central Bank bought 1,123,930 shares of MicroStrategy

🇨🇭 Swiss Central Bank bought 466,000 shares of MicroStrategy

This is simply part of a physical index replication strategy which basically all very large institutional investors have and do. This has nothing to do with what many ppl in the comments see as an implied message that Norges or SNB is now bullish bitcoin or MSTR

I don't know exactly how it is, but in the fund industry, both indexed and mutual, and this includes pension funds, they have a separate custody part and I don't remember there being any major problems with it. We are talking about quite a few trillions.

I don't know exactly how it is, but in the fund industry, both indexed and mutual, and this includes pension funds, they have a separate custody part and I don't remember there being any major problems with it. We are talking about quite a few trillions.

I have a certain level of doubt that whatever insurance that the various custodians supposedly have in place is anywhere close to adequate in terms of really covering the BTC that they hold, yet surely we likely appreciate that the insuring of bitcoin and the custodying of bitcoin and other kinds of digital assets (maybe including shitcoins) remains an evolving kind of a service that could end up playing out quite painfully if there really ended up being large scale disappearances of bitcoin holdings (or other ways that custodians might end up losing access to the coins that they are supposed to be holding). 

From our point of view as individual holders it is probably hard for us to see it, but for companies it makes more sense to have the Bitcoins in the custody of a company with a specialized custody service that they can sue if they lose them or something. Those services, apart from a lot of security measures, will have an insurance for those issues.

I'm surprised MSTR stock got split 10:1, just seeing as how so many other stocks don't seem to be splitting these days.  I know it's absolutely neutral as far as any statistics are concerned, but 20 years ago you wouldn't usually see a bunch of NASDAQ listings getting anywhere near $1k, which is what I'm observing not only with tech stocks but many others as well.

I would be nervous if I were Saylor/MSTR if I were to have more than 50% of my holdings with ONLY 1 custodian, such as Coinbase, and so I continue to wonder how solid are whatever custodian arrangements that Saylor/MSTR has...

If I remember correctly MicroStrategy uses Coinbase for order execution,yet custody I guess they do self custody.
No wallet has been tied to MicroStrategy, this leads me also to the self custody solution: they have more sofisticate way of assessing their balances rather than resorting to a single address to be monitored onchain.

If it's true they keep their private keys off of Coinbase or wherever they trade, I'm curious as to how they keep them secure--not that I expect that to be revealed, of course; I'm just curious.  They've got a lot of bitcoin to keep an eye on.

Roughly 107,000 BTC of MicoStrategy’s holdings appeared pooled with Fidelity Custody, while 79,000 BTC was “held in segregated custody including Coinbase Prime.”

If I remember correctly MicroStrategy uses Coinbase for order execution,yet custody I guess they do self custody.

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I think part of Saylor's big scheme is to convince other companies to follow in his footsteps.
Some have already started, in small steps, following the same playbook as the “Bitcoin Magazine owned" firm Metaplanet in Japan, while others have made vague announcements.
As we often say: “Slowly at Start, then suddenly”

It could be said that this opportunity was available to everyone, but for some reason only MicroStrategy were able to take advantage of it.

This is probably the most important metric to judge the success of MicroStrategy's Bitcoin acquisition strategy.

MSTR Second quarter financial results
https://www.microstrategy.com/investor-relations

Microstrategy introducing a BTC Yield KPI. So a net increase in bitcoin per share after any share dilution. Target is 4-8% per year for 2025, 2026, 2027. YTD shareholders already seen a 12.2% increase in their bitcoin/share.

MicroStrategy (NASDAQ: MSTR) just had their Q2 earnings call. It is pioneering a new Bitcoin Yield KPI, which is aligned with their rebranding in Q4 2023 as the world's first Bitcoin Development Company.

In their words: "We define BTC Yield as the period-to-period percentage change in the ratio of our total bitcoin holdings to our assumed diluted shares outstanding."

And: "We believe this KPI can be used to supplement an investor’s understanding of our decision to fund the purchase of bitcoin by issuing additional shares of our common stock or instruments convertible to common stock."

This is really spelling it out for folks who still don't understand why the stock trades at 2x its underlying bitcoin holdings. (See Kerrisdale here: https://lnkd.in/eFStB7BP)

What's the reason for the premium? The shares are accretive! One look at this slide below tells the story of why MSTR isn't a Bitcoin ETF and shouldn't be priced at NAV. While each share of a Bitcoin ETF represents the same amount of bitcoin forever, each share of MSTR has increased its bitcoin holdings over time.

It's the same reason why a stock's price to book ratio might be above 1. As an investor, you expect the book value to grow over time, so of course you don't price the equity itself at book value. To make it even simpler, if you had a dollar bill that could magically generate a nickel each month, would you sell this dollar bill for a dollar or perhaps a little above the book value of that dollar?

The reason this isn't intuitive for MSTR is because we aren't used to thinking in bitcoin terms. People still think in dollar terms, and this is causing them to miss the plot entirely. One advantage of thinking in bitcoin terms is that you massively outperform on dollar terms. It imposes a brutally high bar on your investable universe. When your hurdle rate is bitcoin, you won't be wasting money.

If someone will give you dollars at a low cost of capital, you take it to buy bitcoin. This is the whole strategy of hashtag#MSTR. It arbitrages the difference in the perceived costs of capital between the waning fiat standard and the coming Bitcoin standard.

I think we'll see this KPI on more companies as they get on the Bitcoin standard. Having a positive BTC Yield will likely be an expectation. People will think: "I want to buy businesses which can grow their BTC holdings so that the total BTC I own is growing without me doing anything."

Replace "BTC" with "dollars" or "cash" and it still makes sense.

hashtag#bitcoin hashtag#btc hashtag#microstrategy hashtag#earnings hashtag#finance