People are currently infatuated with Micro Strategy / MSTR "because it is a 1.5 leverage play on bitcoin", and are in (deserved) admiration of
@Michael Saylor for beating the S&P 500 so convincingly.
I know people close to me who have worked hard and saved bitcoin, but are now being tempted to exchange BTC for MSTR, spurred on by influencers like American
@HODL (I'm a fan) and his latest strong endorsement.
But, MSTR is nothing like BTC. You sell 1 BTC and buy the equivalent value MSTR. You now own a security that is holding ~0.35 BTC on your behalf. The 'BTC yield' isn't yield on your 1 BTC. It is growing the 0.35 BTC up a little higher each year, but nowhere near the original 1 BTC you had.
Yes, I understand Micro Strategy is offering a service that is of value "like an oil company" (see latest Micro Strategy Earnings Call) and therefore trades at a premium. But this is pure speculation just like buying any other company share. The calculation is whether MSTR will generate more value with his company on the 0.65 BTC (the non-BTC treasury part of your 1 BTC investment) than holding the 0.65 BTC would. And in Saylor's own words about other companies, that means MSTR needs to compound more than 29% a year going forwards in terms of company value. That's quite a hurdle - one that very few companies in history have achieved over the long term.
There are good arguments on both sides regarding MSTR, the value the company provides and therefore its premium.
BUT BEFORE SELLING THE SCARCEST FINANCIAL ASSET on earth, one with no counterparty or company director risk, for a speculative asset, one should just THINK VERY HARD.
You may never be able to get the BTC you sold back again.
(disclaimer: I hold both BTC and MSTR - but MSTR only where I can't hold BTC)
