On October 11 I wrote about Michael Saylor and his company Microstrategy whose stock is up 180% in just over a month.
Since then one more thing has become obvious: Michael Saylor has unearthed an incredible strategy: He is tapping into the overpriced convertible bond market, which is desperate for yield, borrowing huge sums of money at a 0% interest rate and buying Bitcoin with it.
So Saylor has essentially built a tool to funnel tremendous amounts of capital from a huge market, that otherwise wouldn’t have had access, into Bitcoin. And there is a certain flywheel effect in place, because as he is buying more Bitcoin, he is now presumably having a substantial effect on the market, pushing the price up, in turn increasing interest in his stock.
First and foremost, this is great for Bitcoin.
As for Microstrategy, although this could go on for a long time, I am not recommending you buy the stock, which is now trading at a substantial ratio to net-asset-value, unless you’re an expert on the intricacies of financial engineering. Unlike many of Saylor’s disciples on X, I don’t believe this will go on forever. One would suspect that as the price of Bitcoin continues to increase rapidly, eventually the risk/return profile for bond investors changes and they sour on Microstrategy’s bonds.
When exactly that will be is anyone’s guess.
