Loading ...BTC & MSTR — The MicroStrategy Ponzi Explained
h/t rube
details at first comment
how Michael Saylor created the most sophisticated financial scheme of our time.
And why it’s both genius and terrifying…
https://x.com/Kryptokrates/status/1860381306103746766
What VALUE is being generated?
https://x.com/SemperVigilant1/status/1860509365087977876
The MicroStrategy Ponzi Explained
rube- Mon, Nov 25, 2024 – 07:16 AM
how Michael Saylor created the most sophisticated financial scheme of our time. And why it’s both genius and terrifying…
https://x.com/Kryptokrates/status/1860381306103746766
What VALUE is being generated?
https://x.com/SemperVigilant1/status/1860509365087977876
*** First, the basics (2/25)
MicroStrategy (MSTR) was a boring software company until Saylor decided to turn it into a “Bitcoin holding company” in 2020.
But that’s just the surface…
*** The Real Game (3/25)
Step 1: Take a public company
Step 2: Issue convertible notes
(nearly zero interest)
Step 3: Buy Bitcoin
Step 4: Watch stock go up
Step 5: Repeat
*** The Convertible Notes Trap (4/25)
Current total: $3B in convertible notes
• $650M due 2025 ($398 conversion)
• $500M due 2027 ($506 conversion)
• $1.05B due 2028 ($507 conversion)
• $800M due 2029 ($672 conversion)
*** Why Convertible Notes? (5/25)
They’re like free money:
• Almost zero interest
• Holders can convert to stock if price rises
• If price drops, they want cash back they invested in (possible bankrun)
Perfect for Saylor, terrible for everyone else
*** The Leverage Game (6/25)
MSTR stock acts like a 3-4x leveraged Bitcoin play:
• Bitcoin up 100% = MSTR up 300%+
• Why? Stock market multiplier effect
• P/E ratios amplify every move
*** The Prison (7/25)
Saylor built himself a golden cage:
• Must keep stock above conversion prices
• Can’t sell Bitcoin (would crash stock)
• Must constantly pump Bitcoin
• No exit strategy possible
*** The Systemic Risk (8/25)
It’s not just crypto bros at risk:
• Pension funds own ETFs
• ETFs hold MSTR
• Banks hold convertible notes
• Everything’s connected
*** The Domino Effect (9/25)
If MSTR falls below conversion prices:
• Note holders want cash back
• Forces Bitcoin sales
• Crashes Bitcoin price
• Further crashes MSTR
• Margin calls everywhere
*** The Hidden Exposure (10/25)
Your grandma might be exposed through:
• Pension funds
• Index funds
• ETFs
• Mutual funds
Without even knowing it
*** The Market Impact (11/25)
MSTR holds ~1% of all Bitcoin Forced selling would trigger:
• Market panic
• Liquidation cascade
• Institutional exodus
*** The Genius Part (12/25) Saylor created a self-fulfilling prophecy:
• More Bitcoin pumping
• Higher stock price
• More convertible notes
• More Bitcoin buying
Rinse and repeat
*** The Legal Angle (13/25)
Everything is technically legal:
• Full SEC disclosures
• Public company oversight
• Transparent transactions
Yet somehow feels wrong
*** The Marketing (14/25)
Saylor’s constant presence:
• Bitcoin conferences
• Twitter spaces
• Media appearances
He MUST keep pumping
*** The True Purpose (15/25)
It’s not about Bitcoin adoption:
• No real business use
• No payment integration
• Pure speculation play
Just financial engineering
*** The Numbers Game (16/25)
Average cost basis: ~$90,000
Current holdings: ~300,000 BTC
Total debt: ~$3 billion
A massive bet on number go up
*** The Risk Factors (17/25)
• Bitcoin price collapse
• Interest rate changes
• Regulatory crackdown
• Shift away from Bitcoin only
Any could trigger collapse
*** The Warning Signs (18/25)
• Increasing conversion prices
• Larger note issuances
• More aggressive Bitcoin buying
• More frequent media appearances
*** The Institutional Angle (19/25)
Wall Street loves it because:
• High liquidity
• Bitcoin exposure
• Stock market benefits
• Regulatory compliance
*** The Retail Trap (20/25)
Small investors think they’re:
• “Buying Bitcoin exposure”
• “Getting leverage”
• “Following smart money”
Actually buying systemic risk
*** The Future Scenarios (21/25)
Best case:
• Bitcoin to $1M
• Notes convert to equity
• Everyone profits
Worst case:
• Bitcoin crashes
• Notes demand repayment (share price crash)
• System collapses
*** The Protection Strategy (22/25)
• Check your portfolio exposure
• Understand the risks
• Don’t rely on MSTR for Bitcoin exposure
• Watch conversion price levels
*** The Bigger Picture (23/25)
This isn’t just about MSTR or Bitcoin
It’s about how modern financial engineering can create systemic risks while appearing totally legitimate
*** The Lessons (24/25)
• Nothing is free in finance
• Leverage works both ways
• Systemic risks are hidden
• Always check the fine print
*** Final Thoughts (25/25)
Saylor created the perfect financial perpetual motion machine.
It works until it doesn’t.
The question isn’t if, but when.
“The question isn’t if, but when”
Look into the source of the funds going into MSTR and other BTC vehicles.
Gen Y and Z have been locked out of the housing and lucrative job market depending upon their life choices and location.
They feel this is their road to riches. They borrow if they can.
They have nothing to loose and feed this market. Truly scary as they bail to close their losing position at horrendous loses.
Their exit sets the price for everyone else.
It’s been speculated that BTC and others have been setup to take the interest away from Precious metals for the obvious reasons.
If enough of the population is wiped out financially, it will be easier to introduce CBDC and UBI. It doesn’t matter what your political views are when you are completely insolvent. You will go along.
A new series of questions for the youth (under 40) on the chairlift.
First day of BTC questions: (Unfortunately all over 55yo) About 20 persons
Half would never buy BTC.
Only two hold some now. One was an early adopter. Bought his first BTC at $400. Now has 30 BTC. Average cost under $20,000 each.
He called BTC internet gambling but it has worked for him. He has a good work pension if the BTC implodes.
The other has a few $’s in an ETF and won’t add more. It’s his “play money”. Can afford to lose it.
The remainder have bought and sold personally or someone in their immediate family with various success rates. Most bailed when they were down.
I will try to ask 20 a day. Gen Z will be there on the weekends.
Again I offer no opinion and just let them talk.
Nice report. Two holding now out of ????
I WAS looking at it around $500, but funds were tight at the time for me to think about “internet gambling”.
another angle vis a vis Hunt Bros and silver (fwiw)
https://x.com/BP_Rising/status/1860857102895284504
https://www.armstrongeconomics.com/world-news/cryptocurrency/bitcoin-the-international-commodity/