🚨 "ONLY" 55,500 BITCOIN?!?!?!?!

Summary

MicroStrategy (MSTR) recently purchased 55,500 Bitcoin, falling short of the anticipated 100,000 BTC. This discrepancy was due to lower-than-expected trading volume generated by MSTR’s ATM program, yielding only 1.7% of the expected volume. While short-term fluctuations in MSTR's stock and leveraged instruments could impact traders, the long-term outlook for MSTR’s Bitcoin strategy remains strong. The company could continue acquiring Bitcoin at a steady pace, positioning itself as a major player in the market. For long-term investors, MSTR’s business model is solid, but short-term traders should proceed with caution.

Takeaways

• 😀 MSTR (MicroStrategy) acquired 55,500 Bitcoin, not the expected 100,000, due to market dynamics and volume limitations.
• 😀 The capital-raising methods used by MSTR include selling shares at market price (ATM) and issuing senior convertible notes to raise funds.
• 😀 MSTR's ability to acquire Bitcoin depends heavily on market volume; they aim for a 5-7% yield from trading volume, but achieved only 1.7%.
• 😀 The higher-than-expected trading volume of MSTR shares ($138 billion) led some to expect a larger Bitcoin acquisition, but that wasn’t realized.
• 😀 Injecting $10-13 billion into the market could have allowed MSTR to easily acquire 100,000 Bitcoin, but the market did not support that level of buying pressure.
• 😀 The speaker suggests that MSTR's Bitcoin acquisition was limited due to timing issues with the execution of the ATM and external factors such as Citron Research's short attacks.
• 😀 Leveraged instruments like options and leveraged ETFs may suffer significant losses if MSTR doesn't acquire Bitcoin as quickly as expected.
• 😀 Short-term traders need to evaluate MSTR's Bitcoin acquisition pace carefully, as it impacts the value of leveraged positions and options.
• 😀 Long-term investors should remain optimistic about MSTR's future growth with Bitcoin, as the company has a robust strategy for continued acquisition.
• 😀 MSTR’s Bitcoin acquisition strategy may take longer than anticipated, potentially causing volatility in the short term, but the long-term outlook remains strong.

Q & A

Why did MicroStrategy buy only 55,500 Bitcoin instead of the anticipated 100,000?

MicroStrategy's lower-than-expected Bitcoin purchase was due to a lower-than-anticipated yield from their capital-raising efforts. They only generated 1.7% of trading volume through their ATM share sales, compared to the expected 5-7%, which limited their Bitcoin acquisition for the period.

What is the ATM (At-the-Money) share program used by MicroStrategy?

The ATM program allows MicroStrategy to sell shares directly into the market at the current market price to raise capital. This method is commonly used to fund their Bitcoin purchases, but it requires significant market volume to generate large cash inflows.

How did the trading volume affect the Bitcoin acquisition plan?

Despite a high trading volume of $138 billion, the capital raised through the ATM program was only $2.46 billion, yielding just 1.7% of the total volume. This low yield limited how much Bitcoin MicroStrategy could acquire, leading to the purchase of 55,500 BTC instead of the anticipated 100,000.

What role do senior convertible notes play in MicroStrategy's Bitcoin acquisitions?

Senior convertible notes are debt instruments that MicroStrategy issued, allowing them to raise $3 billion with zero interest. This money, combined with ATM capital, was meant to fund their Bitcoin purchases, but the overall yield was lower than expected due to market conditions.

Why are leveraged instruments like long calls or ETFs risky in this context?

Leveraged instruments, such as long calls and ETFs, are sensitive to short-term price movements. Since MicroStrategy's Bitcoin accumulation is proceeding more slowly than expected, these leveraged positions may experience significant losses if the anticipated price increases do not materialize quickly enough.

What does the speaker mean by the term 'slingshot' in relation to Bitcoin price movement?

The 'slingshot' refers to the potential for a sharp price increase after a period of price suppression caused by MicroStrategy's capital-raising efforts, such as share sales or taking on debt. This process may cause short-term price dips, followed by a strong recovery, but the timing of this recovery is unpredictable.

What is the speaker’s general view on trading leveraged instruments like ETFs or call options?

The speaker advises caution when trading leveraged instruments, particularly in volatile markets. They believe that such instruments decay in value over time, especially if the underlying asset, like MicroStrategy's Bitcoin acquisitions, doesn't move as quickly as expected.

What was the impact of Citron Research's short-seller report on MicroStrategy’s stock?

The Citron Research short-seller report caused a rapid decline in MicroStrategy's share price. The sudden drop in stock price led to panic selling, as institutions pulled their buy orders, exacerbating the decline.

What is the speaker's recommendation for MicroStrategy’s capital-raising strategy?

The speaker suggests that MicroStrategy should have committed to a steady capital-raising plan, such as selling a set amount of shares every week, regardless of short-term price movements. This approach could have mitigated the volatility seen in their stock price.

How does the speaker view MicroStrategy's long-term prospects in relation to Bitcoin?

The speaker remains optimistic about MicroStrategy’s long-term prospects, stating that the company is stronger than ever with its growing Bitcoin treasury. They believe MicroStrategy's business model is robust, positioning the company to continue acquiring significant amounts of Bitcoin over the long term.