Saylor’s Time bomb

Tone deaf Michael Saylor posted this image this morning (which I have doctored) beneath the Maxis mantra of “HODL”, in relation to BTC’s current sell off:

His post was being viewed as tone deaf because he is apparently one of the issues driving this sell off, as the market has come to the realisation that Saylor has pumped 27bn USD into BTC over the year and the price has barely budged – that’s around $500m/week and it has done nothing other than leaving Microstrategy with an interest bill of something like 50m a week.

There have been other factors too like profit realisation as some coin analysis I was reading was that most of the coins moving back to exchanges have been only recently acquired so holders were locking in whatever gains they have made over the past couple years on this slower price appreciation. I think the second and final tranche of MtGox also became available this October, and so there are probably quite a few committed sellers there too at the margins.

All of these factors have lead to an interesting sell of in the BTC space the past couple weeks since it broke down on 3 years of support from its exponential trend line. Looks like it is currently bouncing off linear support, like it has done on previous occasions – but in all those instances exponential support was well strong.

While it looks as though the trend is likely to continue, as the BTC price has touched and bounced from the linear trend line on 3 or 4 occasions previously, it is probably worth pointing out that it did so while well within the support of the exponential trend line… a line of support that was broke a couple weeks.

Anyhow, back to Saylor, and in order to generate some discussion and additional posting to this site I am going to reproduce a tweet that I found interesting this morning:

$MSTR‘s basic mNAV is at 0.94… but what does that mean? Also, is the average Bitcoin purchase price of 74,000 relevant?

Let’s take a closer look. Nothing concrete for MSTR or Bitcoin at this moment, but it is the start of a cascade that will be very difficult to stop for

Let’s look at the facts atm and how they may play out further:

1. He can’t sell MSTR for Bitcoin anymore, since that is hurting shareholders now with “negative bitcoin yield” – an entirely made up metric, but he would be diluting shareholders, so it doesn’t make any sense anymore.

2. He can’t sell $STRC for Bitcoin since it is lower than 99 USD and unlikely to stay at a “sell-able” level.

3. All his prefs ( $STRD, $STRF, $STRK) are trending down and are at a massive discount – so, he won’t be able to raise much funds there either.

4. The demand for new Prefs and Converts seems to be zero. Let’s see if/when $STRE actually comes to market.

5. MSTR has to pay around 15mil USD in dividend and interest and operating cost per week… this will have to come from Commons (MSTR).

6. This is all common knowledge. Options- and Convert-Arb traders will jump off MSTR and close their arb. $MSTY holders will sell MSTR.

7. Any ETF will sell off MSTR as the % in the ETF is dropping.

So, all this will put even more pressure on MSTR and thus mNAV.

My personal calculations are that mNAV will go to around 0.2… so another 70-80% down from here compared to Bitcoin.

Then, 1 of 3 things happen:

1. Existing MSTR Shareholder want a return of capital (aka dividend) -> this will be a massive sell pressure on Bitcoin. Basic mNAV is what matters here.

2. Saylor goes into voluntary liquidation or Shareholders force such a liquidation. Diluted mNAV is what matters here. This will be an insane sell pressure on Bitcoin.

3. The Converts come due and Saylor can’t pay them and he goes into involuntary liquidation. This would be havoc and I think Bitcoin would drop below 1,000 USD easily.

The only way out I see is for a larger buyer to step in… the only one I see is the government, but why would they bail out a useless company.

Fun fact: The average Bitcoin purchase price of 74,000 USD is totally irrelevant to MSTR… all it does is skew the unrealized gains/losses… a totally made up metric by Saylor anyways.

@julianhosp

Anyhow, I haven’t been following crypto news much and have no idea about Saylor’s activities or whether the above represents a true description of the issues Microstrategy faces. Some people have previously spruiked both BTC and Microstrategy here, and I have no skin in the game other than some downside bets on Polymarket (once the exponential trendline broke), it might be good for all of those interested in the subject to revisit their decisions and explain why they remain either pro or con in relation to holding BTC or crypto in general.