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Yahoo
27-05-2025
- Business
- Yahoo
Wall Street Can't Beat Michael Saylor's Runaway Crypto Engine
(Bloomberg) -- Wall Street keeps inventing new ways to ride the digital-currency boom — from amped-up ETFs and tokenized funds to structured products — and crypto competitors keep circling. But the trade still delivering the biggest rewards belongs to Michael Saylor. UAE's AI University Aims to Become Stanford of the Gulf Pacific Coast Highway to Reopen Near Malibu After January Fires His firm, now branded as Strategy, formerly known as MicroStrategy Inc., pioneered the original capital-markets hack in this era of retail speculation. The playbook? Sell stock and debt. Use the proceeds to buy Bitcoin. Watch the market rip. Then do it all over again. After huge gains last year, his capital-market machine keeps running — for now. Strategy shares are up about 26% this year, beating Bitcoin's 16% gain, and currently rank as one of the best-performers in the Nasdaq 100. Traders are still lavishing a hefty premium on Saylor's stock — well above the value of the firm's Bitcoin holdings — a dynamic no ETF can match. 'Saylor was the first, he was the earliest and he's got the most leverage,' said Matt Maley, chief market strategist at Miller Tabak + Co. 'He's not just playing Bitcoin, but also his own stock and the stock market to his advantage — and using leverage at the right times.' That premium acts like rocket fuel in up markets, helping Strategy eclipse the returns of not just Bitcoin, but the ETFs designed to keep up with it. It's outpacing all 74 crypto ETFs in the US bar one. It's even outgunning double-leveraged ETFs tracking the firm itself. MSTX and MSTU — designed to deliver two times the stock's underlying returns — are each down about 1% for the year. These funds reset their exposure every trading day, so even in an uptrend, choppy price action can degrade longer-term returns — known as the volatility drag. Strategy, by contrast, is a self-reinforcing crypto engine. As its stock rallies, it unlocks more balance-sheet firepower, turning market momentum into more crypto accumulation. As Bitcoin has hit records this month, the trade keeps spinning. Wall Street is churning out more diversified products, and the number of Strategy competitors is growing with President Donald Trump's media company the latest to join the fray with a $2.5 billion Bitcoin treasury deal. Still, what's proving hard to replicate is the sheer belief system surrounding Saylor himself. His firm isn't merely a Bitcoin proxy, it's a vehicle for crypto maximalists to express conviction in their faith — a vehicle that's reflexive, levered and narrative-driven. In other words, the stock doesn't just move with Bitcoin, it feeds off it. For retail believers, the premium is the point, and that's put Strategy in a unique category. That means despite the arrival of cheaper, institutional-grade Bitcoin offerings like BlackRock's IBIT, Strategy remains a market story that no ETF can match. The company's market cap has surged from around $1 billion to over $100 billion over the past five years — ever since Saylor first revealed his Bitcoin-buying program. Strategy now holds more than $60 billion of Bitcoin, by far the most of any of its copycats. It has also laid out plans to raise $84 billion to buy more, by selling a combination of shares and fixed-income instruments. The trade cuts both ways, of course. When Bitcoin slumped in 2022, Strategy plunged more. And that was before it leaned even harder into leverage. If the crypto rally reverses, the dynamic that lifts Saylor's stock in the good times could fuel declines in the bad. For now, though, the success has sparked a wave of imitators, with at least 30 publicly listed companies in the US doing so. Meanwhile Bernstein analysts project that the digital currency could see $330 billion in inflows via corporate treasuries before 2030. Saylor has welcomed the trend. 'It's a phenomenal story — for Bitcoiners, it's a huge bull thesis,' said Strahinja Savic, head of data and analytics at FRNT Financial. 'If I had to list off the top three reasons why I'm bullish Bitcoin, the corporate adoption is up there.' --With assistance from Dave Liedtka. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol Millions of Americans Are Obsessed With This Japanese Barbecue Sauce ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-02-2025
- Business
- Yahoo
Strategy Is Down 50% From Its Highs. What Does It Mean for Its $43B Bitcoin Holdings?
Disclaimer: The analyst who wrote this piece owns shares of Strategy (MSTR). Bitcoin's sharp price declines have dominated news headlines this week, but major corporate BTC holder Strategy (MSTR) has been in a downtrend for more than three months. Trading around the $250 level on Wednesday, Strategy is lower by about 55% since peaking at $543 on Nov. 21. Investors in leveraged MSTR products have suffered even greater losses. The Defiance Daily Target 2x Long MSTR ETF (MSTX) has plunged 90%, while the T-REX ETF (MSTU) has declined 85%. Despite the decline in bitcoin, Strategy's BTC acquisition remains profitable. Since initiating purchases in August 2020, the company is up 32% on its holdings, with an average cost basis of $66,300 per BTC and an unrealized profit of $10.65 billion at bitcoin's current price of about $87,000. A closer look at Strategy's convertible debt highlights potential 'liquidation prices' or forced bitcoin sales. Notably, all of the company's 499,096 BTC remain unencumbered, meaning Strategy has not pledged any bitcoin as collateral. An earlier convertible note using bitcoin as collateral with Silvergate Bank was fully repaid. According to Bitcoin Overflow on X, Strategy has $8.2 billion in total outstanding debt, backed by 499,096 BTC, currently valued at $43.4 billion. The short answer: As long as the value of Strategy's bitcoin exceeds its debt levels, the company would not need to sell any of its BTC holdings. In other words, bitcoin would have to decline all the way to approximately $16,500, or roughly another 80% from current levels. Taking a more detailed look, two of the six outstanding convertible bonds—the 2029 and 2030 issues—are below their offering price. They're large bonds, though, accounting for $5 billion out of the $8.2 billion total. Even then, the debt does not mature until 2029, allowing time for recovery. And in theory, Strategy could roll over more paper, if that were to happen. If the value of the company's bitcoin were to drop below debt levels at the time the convertible bonds matured, and the MSTR stock price was below the conversion price (which would be very likely in that scenario), Strategy — in order to prevent massive dilution in its stock — would likely decide to sell bitcoin to repay the bonds in cash rather than converting them into equity. Read more: In Defense of the 'MicroStrategy Premium'
