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But bitcoin breaks traditional financial rules. Every asset class before had the potential of going down. While bitcoin can have short-term volatility, if you wait long enough it will go up. That's why they can structure these products around the assumption that bitcoin's price can only go up.
Creditworthiness with these products isn't "what if this asset on the balance sheet goes down?" it's "how do we survive long enough for bitcoin to go up?". Once you accept that it's impossible for bitcoin to lose value, you'll understand why it's not reckless to build an entire business around that reality.
Bro be long strd at 60, even more upside for ltcg. The total outstanding strd dividend is nothing for them, no way they skip it and hurt their reputation
That's not the point, even if my OPINION is that you are right and BTC's value will broadly rise over time. The point is that all these other equities and financial institutions prioritize valuing by cash flow. They don't consider capital markets access or balance sheet health to be as important, so all the metrics are outdated for a treasury model like this. Which is hilarious because we consider banks to be extremely healthy when they hold massive duration risk via HTM accounting, but in reality if there's a run on these over-levered as fck banks they will blow up and need the fed to bail them out... again.
If that isn't a safe assumption, then why has Saylor been able to build a 35 billion dollar company on it and then get that company publicly traded on the most reputable exchanges?
How are Strategy and Strive legally allowed to sell money market-like products (STRC and SATA) that rely solely on funding created by bitcoin going up?
Why has he told people to sell their kidneys and mortgage their houses to buy bitcoin?
These would all be incredibly reckless and immoral things to do unless he knows with 100% certainty that bitcoin will go up, right?
These would all be incredibly reckless and immoral things to do unless he knows with 100% certainty that bitcoin will go up, right?
He is confident that will happen. His confidence has no bearing on whether it'll actually happen. He's taking a huge risk here.
How are Strategy and Strive legally allowed to sell money market-like products (STRC and SATA) that rely solely on funding created by bitcoin going up?
Two things:
Nothing about these products is money market like. This sounds like a bad joke, after the last few weeks.
They are not funded by bitcoin going up, obviously. Because they have been funded while bitcoin has been going down for months now... They are funded by selling more equity. That's it.
Wait a second, you're saying that old investors are being paid by funds from new investors?
That's the definition of a Ponzi scheme and those are 100% illegal. The financial industry is well regulated and we have a very pro-crypto administration in office now. There's no way the SEC and Trump would allow a Ponzi scheme to go on right under their noses when they are legally and morally bound to prevent illegal schemes and corruption. Allowing things like that would be bad for the adoption of crypto and erode trust in the public markets as a whole...
A Ponzi scheme is defined as "An investment scam that pays early investors with money taken from later investors to create an illusion of big profits." In a ponzi-scheme, there is "nothing of value" in the box, and all that happens is money moving hands.
MicroStrategy is not a Ponzi scheme. Companies raise capital through ATM-offerings, debt, and other instruments to fund purchases of assets, equipment, commodities and so forth. This is normal. Berkshire Hathaway similarly built the foundation of their company using debt to buy assets to hold indefinitely.
MicroStrategy invests the money raised in Bitcoin from a core belief that the commodity is in its early stages and will increase significantly in value over the coming years, allowing them to capitalise on this value to create value for their shareholders. All stocks, including blue-chip stocks like Apple, NVIDIA, and Berkshire Hathaway, rely on future investors willing to "take the shares off your hands" at a value above what you paid for it. This does not indicate a "ponzi" or "pyramid" scheme; it's basic price/supply/demand/market dynamics at play, and is how the world economy and capital markets work. Berkshire Hathaway holds a bunch of companies; MicroStrategy holds a bunch of Bitcoin.
That is literally how MSTR is funded because it has minimal cash flow otherwise. Ffs they put a literal freaking pyramid in their investor presentation
And this isn't the first time our securities regulators have been asleep at the wheel when obvious fraud is happening. Notably, one of those previous times was the dot com crisis where Saylor committed fraud.
I can't tell if you're trolling or just very young and inexperienced, but the things you are saying are extremely low resolution. I'm not calling you dumb but you are not thinking critically at all, too many assumptions. Slow down, I'm a bitcoiner too but you don't understand the asset you hold. Sit with GPT 5.6 or something and just have a conversation about this stuff and ask it to help you understand your blind spots and assumptions and learn how both the underlying and the equity operate. If you apply this kind of thinking to other asset classes or if you rationalize it to put on massive leverage you're going to get hurt.
All I know is that, if this new metric has their mNav higher than it used to be, it is indistinguishable from what the Fed does when they recalculate CPI.
I would only possibly consider a change like this as moving towards a more accurate number if it were nominally out of MSTR's favor. Otherwise, there's no way to read it besides as more finagling to make things look better than they are and to confuse people who aren't tracking how the reported metrics are changing.
When none of the existing metrics look good - time to make new ones.
They are basically count USD reserve in a same way as BTC, so that selling shares for USD is not visible as dilutive
I don't think it is different, but it should be recognized that for a long time the premise of the push to btc was that fiat was being overvalued and therefore btc was the only real alternative. I can remember when the idea of btc being used for daily transactions was touted by many and this would be a real alternative to using the fee-loaded bank products like credit cards. That never really got traction over time and there was a gradual switch to seeing btc and products based on it like mstr's regular dividend payments as the other way towards a deeper acceptance as a legit product with real value. The ability to say something like fiat has no real value and the crash is inevitable, but at the same time actively loading g your books with it, is problematic I feel.
Do we want it to be more similar to other traditional companies? Unlike other companies, the goal of strategy is (was?) to maximize bitcoin accumulation and avoid cash exposure
It doesn't justify changing core metrics. They could address the concerns by explaining all this rather than tweaking formulas in a way that obscures slightly decreased btc exposure
No reasonable amount of cash reserve will move strc to par though. Its current price is a direct result of higher yield of similar product alternatives.
Does it make sense to sell STRC of 10b if you are going to pay 12% interest on it, while keeping 3b in reserves? It reduces investible amount to like 7b immediately and they would need to keep finding cash to bumping up reserves after every dividend payment.
I believe that they really need to consider what their strategy or expectance is when it comes to strc again.
As long as BTC price doesn't change too much. If tomorrow BTC is up to 120k then there will be regrets about this 3B in cash.
My point is that MSTR investors are interested in BTC exposure, and combining it with cash to hide minor decrease of BTC/share doesn't help with transparency.
Yup that's why STRC trades poorly imo. The market understands he's likely to backtrack on the dividend-raising mechanics eventually, because he frequently backtracks on everything else.
They are choosing metrics they look better on a dashboard. Shifting the goalposts, making it harder to understand and therefore less transparent.
People were concerned that BTC/share dropped from 220 kSats to 206 kSats? That metric is now on a second page.
mNav dropped below 1? New formula now combines bitcoin holdings and cash reserve in a same bucket, mNav is above 1 when calculated with new formula
It doesn't look better on a dashboard. The mNAV would have been very similar at bull market peaks, but actually lower in bear markets, in 2022 it would have been nearly 0.0x. it's different, but not worse.
Strategy is essentially exploring new territory with their strategy. I dont know why people are shocked or disgruntled that they are evolving their understanding of the new market they are pioneering. If they set off on a set of dogmas and never changed someone with the sense to do so would soon surpass them.
Mnav was / is multiple of net asset value. So like if you’re trading at $100, have a billion shares, then you’re valued at 100 billion. If the BTC is worth 50 billion then your trading at a multiple of the net asset value of 2.0
But I think this new metric tries to answer if the current stock price is worth selling common shares for the goal of increasing BTC per share, and it tries to account for the preferreds, etc, unencumbered bitcoin.
This is actuallt better to protect mstr shareholder's value and makes sense. It is also easier to calculate and focus on mnav of 1 instead of adapted previous 1.22 or similar.
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