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The end of the MSTR party?
898 sats \ 24 comments \ @elvismercury 12h bitcoin
Apologies bc I know this must have been discussed someplace, but I'm in and out of paying attention about btc and the last time I was in the state of "knowledge" was just wild speculation, and presumably more is known now.
So: what happens if the price of btc crashes and stays low long enough that all those weird dividend-paying instruments that MSTR invented can't be funded with the previous ponzi behavior? My weak understanding from btc galaxy-brained influencers is that they don't actually HAVE TO pay anything, so the only thing they will actually lose is whatever credibility they inexplicably gained through this run-up; meaning, it will mark the definitive end of their speculative attack, w a bunch of unhappy bagholders, but no forced liquidation of their btc assets.
Is that right? Simple as that? Would love for someone who's been paying consistent attention to explain it or point me to the explanation.
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227 sats \ 7 replies \ @grayruby 11h
Some of them they can suspend dividend payments but not all of them. They can drastically reduce the yield which would essentially make the products useless and probably go to near zero.
What will be interesting is to see what happens is MSCI removes them from the index. As long as they are in the Nasdaq 100 index and etfs have to buy their shares I think they can continue to service the prefs with new common equity (dilution). But if they don't have a passive bid anymore, we are in a prolonged bear market and debt issuance becomes difficult they may have to sell some Bitcoin to pay the prefs. That would probably cause more selling pressure to both Bitcoin and the stock so I am guessing that would be a last resort.
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51 sats \ 5 replies \ @freetx 10h
debt issuance becomes difficult they may have to sell some Bitcoin to pay the prefs.
Wouldn't it make more sense for them to just issue more stock and dilute the shareholder to cover divi's?
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50 sats \ 1 reply \ @Bell_curve 7h
is MSCI similar to Russell index?
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0 sats \ 0 replies \ @grayruby 7h
They have a number of indices primarily used to capture international and global markets but they do have country specific and sector specific indices as well.
I think the Russell indices is only for small caps.
A quick check with AI says there is around 18T benchmarked to MSCI Indicies and 19T benchmarked to Russell Indices so I guess in terms of size they are very similar.
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18 sats \ 2 replies \ @grayruby 9h
Yes but you have to have buyers for the new issuance.
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11 sats \ 1 reply \ @freetx 9h
There will always be buyers, just at a lower price.
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27 sats \ 0 replies \ @Solomonsatoshi 8h
You could say the same for USTs...or phone cards...
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20 sats \ 0 replies \ @BeeRye 5h
the commons are so fucked
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272 sats \ 1 reply \ @Scoresby 12h
Bitmex had a good article on STRC (#1282573). I believe they do have yp pay the dividend, but can reduce it to zero over three years.
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0 sats \ 0 replies \ @elvismercury OP 12h
Great resource, thanks, will have a look. From your post, that's the "lowest-risk" (to the consumer, presumably) one - what about the others? As I've represented?
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112 sats \ 5 replies \ @brent 9h
With their common stock in free-fall, down about 64% since July, it is harder for Strategy to raise enough capital to meet their debt and dividend payments. Their efforts to pump $STRC to $100 will be even more costly and probably even less successful -- it only reached $100 8 out of 118 days, and has not yet closed a day at $100. I'm sure that their Nasdaq 100 inclusion is helping with funding, but its adding weight to the common stock.
HOWEVER, the elephant in the room is that Strategy owns 649,870 BTC. It is worth about $55 billion today, down from $82 billion last month. Their debt-to-capital ratio is now around 14%, comparable to Microsoft. They could take out loans against their BTC stash, if necessary.
If you are of the belief that BTC is likely to continue dropping and stay at much lower price levels for at least an extended period, then Strategy looks very precarious indeed.
On the other hand, the BTC price has followed global liquidity levels for over a decade. For the past year or two, governments have been tightening the money supply, in an effort to control post-pandemic inflation. This has caused a liquidity glut, with major economies either in a recession, or teetering on one. That seems likely to be coming to an end soon. Japan just announced a ¥21 trillion injection to kick off the liquidity party. So the BTC bear market probably won't last long, as money printers return to their default setting of Brrrrrr.
Time will tell if the scale-invariant behaviour that BTC has established continues to hold. If it does, and the coming liquidity cycle pushes the BTC price up another 10x, what will that say for Strategy's credibility? 🧐
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61 sats \ 2 replies \ @freetx 7h
The biggest problem Bitcoin Treasury Companies have is not obvious on first look. Their biggest problem is shareholder have no access to their fundamental NAV.
If you buy a share of MSTY and it dips below NAV, what can you do as a shareholder? The concept of "efficient markets" and "valuations" is great, but at the end of the day an electronic stock certificate really means nothing. The stock can dip below NAV forever and there is not much you can do as an equity holder to access that underlying asset....about the only thing is to oust the CEO and install one who promises to sell the assets to raise cash to do a stock buyback.
But that itself is double-edged sword. If stock price is below NAV with the current assets....what will stock price do after new-CEO sells the assets? In theory the price should rise if he is promising to buy back stock with the cash....but well the market already doesn't value the NAV story....so good luck.
In the end, the entire stock market is you giving your cash to some random 3rd party and hoping you get something back in return....ultimately stocks are a bigger fiat than "fiat".
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9 sats \ 1 reply \ @brent 7h
No one buys a stock with the expectation of access to the contents of the company's treasury, when the company is still operating. Traders are free to buy and sell the stock as they wish, according to NAV or any other criteria.
Strategy is executing a speculative attack on the dollar by leveraging the equities market to accumulate bitcoin. Raising unlimited dollars to buy limited bitcoins. If you think the price of BTC is going to rally, MSTR might rally even more. And vice versa, in the other direction.
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11 sats \ 0 replies \ @freetx 7h
No one buys a stock with the expectation of access to the contents of the company's treasury
Then what are you buying?
If you think the price of BTC is going to rally, MSTR might rally even more.
well.....the price of MSTR is already below NAV, so what will BTC rallying do it? Maybe it rises at 0.9x NAV?
Imagine I sold you "shares in a gold mine" but I made it clear there was no possible way you would ever be allowed to access the gold, in fact I forbade you from even looking at it...would you do it? If so, I have a gold mine to sell you.
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21 sats \ 1 reply \ @elvismercury OP 9h
Logic seems sound; my concern is and has always been the implicit tautology: if btc does great, strategy and its derivatives are probably fine. Maybe super-fine.
But it's basically complicated leverage crossed with a ponzi and a dose of speculative attack, with built-in assumptions about number going up for the whole rickety machine to keep toppling forward.
In situations where btc is having trouble for one reason or other, what happens to these nested Rube Goldberg machines? That's what I want to know.
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0 sats \ 0 replies \ @brent 8h
Yeah it's pretty crazy but we're finding out! 👀
I suspect the money printers will continue going brrrr, and magic internet money has a fixed supply, so...
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101 sats \ 0 replies \ @SpaceHodler 10h
A collapse scenario: https://fxtwitter.com/ActuallyClimber/status/1985835237947936871
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54 sats \ 0 replies \ @Machiavelli23 9h
I own BTC not MSTR but I do think that the price drop is an attempt to shack plebs and institutions like MSTR out of their coins. An orchestrated attack against MSTR achieves both. This video might help explain, it is a bit long but really informative.
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0 sats \ 2 replies \ @Solomonsatoshi 8h
It is the four year cycle. Remember all the usual suspects talking incessantly about it in the lead up to the halving- then more recently going silent on it?
They said 'its different this time because we have institutional investors and ETFs' Bullshit- institutional investors and ETFs are even more fickle and quick to jump ship than private Bitcoiner investors were in previous cycles!
If you think there will be a rebound put your sats where you mouth is-
https://beta.predyx.com/market/bitcoin-price-will-be-usd110000-or-above-on-1159pm-january-31-2026-according-to-coinbase-new-zealand-time-1763841090
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66 sats \ 1 reply \ @CliffBadger 7h
$110k by Jan 31? I'm down for the free money.
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0 sats \ 0 replies \ @Solomonsatoshi 6h
Good to see someone here puts their sats where their mouth is!
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0 sats \ 2 replies \ @DarthCoin 11h
Why do you care so much about a scam? Are you in? You shit your pants ?
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0 sats \ 0 replies \ @Solomonsatoshi 8h
Let all genuine Bitcoiners here boycott zapping any comments and posts from people who have not enabled sats zapping.
End the plague of arsemilking parasites.
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0 sats \ 0 replies \ @Solomonsatoshi 8h
Why do you call yourself a Bitcoiner but here on Stacker News you refuse to enable your Bitcoin wallets and zap in sats?
Instead you deliberately disable Bitcoin payments and sling around CC shitcoins.
Are you just here for arsemilking sats off of the genuine Bitcoiners who take the time to enable wallets and pay in sats ?
Reinstate your wallets or continue to be called out daily for being a blatant hypocrit.
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