Michael Saylor, the chairman of MicroStrategy (now Strategy₿), presents his investment strategy as simple: “Buy Bitcoin. Hold forever. Profit.” But is buying MicroStrategy ($MSTR) stock really the same as investing in Bitcoin? Anton Gloub, a cryptocurrency expert, explains why MicroStrategy is not a pure Bitcoin play but a leveraged bet full of risks.
1. MicroStrategy is NOT a Direct Exposure to Bitcoin
At first glance, MicroStrategy may seem like an ideal way to invest in Bitcoin. The company holds 499,000 BTC worth approximately $43.7 billion. However, its financial structure is much more complex.
MicroStrategy has $8.2 billion in debt, meaning its business model relies on aggressive leverage.
The price of MicroStrategy stock is significantly overvalued compared to its Bitcoin holdings.
In reality, investors are not buying Bitcoin – they are buying a high-volatility financial instrument that is prone to massive market swings.
2. Hedge Funds Use MSTR for Volatility Arbitrage
Why does MicroStrategy stock move more dramatically than Bitcoin itself? The answer is simple – it’s used for arbitrage by hedge funds.
MicroStrategy issues zero-interest convertible bonds.
Hedge funds buy these bonds and hedge by shorting $MSTR stock or Bitcoin futures.
As a result, MicroStrategy stock becomes a tool for volatility speculation rather than true Bitcoin exposure.
MicroStrategy is a playground for volatility traders, not long-term Bitcoin believers.
3. Saylor’s Strategy Works Only in a Bull Market
Saylor’s investment model follows a repeating cycle:
1. Issue zero-interest convertible bonds.
2. Buy Bitcoin.
3. Pump $MSTR stock price higher than its Bitcoin holdings.
4. Issue more stock at a premium and buy more Bitcoin.
This works… as long as $MSTR stock remains artificially inflated. The problem arises when Bitcoin enters a bear market.
If Bitcoin’s price drops, $MSTR stock also falls.
A decline below the bond conversion price could force MicroStrategy to sell Bitcoin, causing further price drops.
A domino effect could trigger a liquidation spiral and a market crash.
4. The Risk of Liquidation – What Could Go Wrong?
Michael Saylor claims that MicroStrategy will “never” be liquidated. However, financial history shows that excessive leverage often leads to disaster.
How could a collapse happen?
1. $MSTR stock drops below the bond conversion price.
2. Bondholders demand repayment.
3. MicroStrategy lacks cash reserves → must sell Bitcoin.
4. Selling Bitcoin pushes Bitcoin’s price even lower.
5. More liquidations occur, creating a death spiral.
This is exactly how leverage explosions happen in financial markets.
6. Would You Trust Saylor’s Risk Management?
Saylor does not manage risk traditionally – he simply believes Bitcoin will always go up. His latest move? Raising another $2 billion to buy more Bitcoin.
This strategy works only in a bull market. But what happens if Bitcoin corrects by 50%?
MicroStrategy’s stock could crash.
The company would be forced to sell Bitcoin.
This would accelerate Bitcoin’s decline.
This is not risk management – it’s an extreme leveraged speculation.
Conclusion: Bitcoin or MicroStrategy?
If you want to invest in Bitcoin, the best option is… buying Bitcoin directly.
MicroStrategy is not Bitcoin. It is:
✔ A leveraged investment
✔ A centralized entity dependent on capital markets
✔ A speculative bet on Bitcoin’s price increase
This comes with massive risk, which could lead to huge profits… but also catastrophic losses.
Is MicroStrategy stock worth buying? Or is it better to just hold Bitcoin?
The choice is yours.
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