Why and How MicroStrategy (MSTR) will become the most valuable company on Earth
To understand MSTR, you need to understand first what bitcoin is.
If you own bitcoin, you're already halfway there on understanding MSTR.
The simplest way to describe MSTR is that it “MSTR is a leveraged bitcoin investment.”
If you had taken on debts before to buy bitcoin, it would be easier for you to understand what MicroStrategy is.
Because that is what basically MicroStrategy is doing.
They are borrowing money to buy more bitcoin.
I have taken debts before to buy bitcoin so I can relate with the strategy.
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The difference between me and MicroStrategy is that MSTR has more financing options available to them since MSTR is a publicly listed company.
A person like me is limited to personal loans, bank loans, credit card loans etc.
Currently MSTR is able to borrow money & buy more bitcoin in 2 ways:
Issuance of shares or called At-The-Market Offering (ATM)
Issuance of Convertible debt
Understanding these two options is the deeper level of understanding MSTR
What I want to do in this post is to give you a high-level overview of what MSTR is doing.
We won’t go to the details of how ATM works and Convertible debt. Those topics deserve a dedicated post in order to understand them.
Why MicroStrategy (MSTR) will continue to go up
If you believe that bitcoin will continue to go up over the long term, you have 2x more reason to believe that MSTR will go up also because they are a leveraged bitcoin company.
Bitcoin will continue to go up because more people will discover that bitcoin is the best store of value asset.
Saylor always present this chart comparing market cap of bitcoin versus other assets:
Bitcoin is just very tiny asset compared to the other assets that it will take share from in the future. You have to squint your eyes to see bitcoin in the above chart.
Every time you think that you are late to bitcoin, think of this chart.
If you believe that bitcoin will become more and more valuable over time, it is not then crazy to think that the company that holds the most bitcoin will be the most valuable company on planet Earth.
What is the Endgame for MicroStrategy?
Their goal is to simply to have more bitcoin than yesterday. That’s actually the endgame.
I know it is so simple it is so hard to understand. But let me explain.
You and I have different reason why we keep buying bitcoin, but the common denominator is that because we believe that bitcoin will go up.
When it goes up, we may sell some to buy a house or car, or to retire and travel, or pay our debts, or pay our siblings debt, buy our parents a house etc.
But for MSTR, what is their end goal? Are they going to buy up some business? are they going to lend those bitcoins? earn yield on those bitcoins? become a bitcoin bank?
Those are all possibilities way down the line in the future but that is not on their focus now.
The goal is simply to increase bitcoin holding. Or to be exact increase bitcoin per share. Remember that MSTR is public company. It answers to the shareholders. In theory, the company is own by the shareholders. So, their goal is to just have more bitcoin per share. To accumulate more bitcoin for its shareholders.
Short-term catalyst
The short - term catalysts are as follows:
Nasdq100 & S&P 500 index inclusion - inclusion to passive indexes will result to added flows to MSTR. These passive index funds have become very big that inclusion to these indexes have been very helpful in terms of additional passive buyers of the stock of these company.
By being included in this passive index, this will be additional fiat that MSTR will continue to suck and shovel it into bitcoin.
Nasdaq 100 inclusion is expected to happen this December while S&P 500 will continue to happen next year.
Bitcoin Bull Market in 2025 - MSTR is correlated with bitcoin, if 4-year cycle continues to happen, we are expecting a bitcoin peak around Q4 2025. That will also be positive for MSTR price since it is correlated with bitcoin price.
Long-Term Catalyst
I personally believe that investing in MSTR 0.00%↑ today is like investing in Apple or Amazon in year 2000s
In the year 2000, the internet was early, at that time, iPhone was not yet invented and Amazon store I think is just selling books online. Now Amazon is an everything store.
My point is that there are future possibiliteis that are still unknown today for MSTR.
Internet was the base layer on which the developments we have today was built upon.
Today I believe that bitcoin is the same, there are developments that are being built and will be continuing to build that will improve our lives and therefore result to growth for the company.
Right now, the business model of MSTR is to take advantage of the financing tools to get leverage to buy bitcoin. It is also possible in the future that they can use their bitcoin holdings to build business models on top of it just like bitcoin lending, generating yield, being a bitcoin bank etc.
What are the risks?
Of course, nothing on earth is free. Everything has risk.
The most common risk you take when investing in MSTR is the custodial risk.
Investing in MSTR is a hot topic for some bitcoin maxis.
It is because bitcoin maxis are advocate of not trusting third parties or the “not your keys not your coin”
I don’t want to give my opinion to this because obviously I have bought MSTR and therefore I am not a bitcoin maxi purist. But I respect their opinions, and I don’t debate on it.
What I can say that a real risk for me in investing in MSTR is what if the the country where I am from become very authoritarian, they can freeze my bank accounts & brokerage accounts. Those are the real risk in my opinion. Of course, cold storage bitcoin cannot be seized.
That’s why even though I believe MSTR will outperform bitcoin (not financial advice), I will not sell all my BTC for MSTR.
Cold storage BTC is very powerful, even though I invest in MSTR, I wouldn’t recommend it right away to a no-coiner. Understanding and owning cold storage bitcoin I believe is a very important step before investing in MSTR.
Another real risk is that what if MSTR did not perform well in relation to bitcoin. That is also a possibility even though I’m not betting on that.
That’s it for this post. If you want more MSTR content, check the below posts:
