Michael Saylor is undoubtedly a prominent name. He is not only the founder of Strategy (MSTR) but has also garnered attention for his bold Bitcoin reserve strategy.
Since October 2024, MSTR's stock price has experienced significant fluctuations, soaring from $188 to $540, and then falling back to the low range of $300.
Behind all this, Saylor's Bitcoin accumulation strategy is gradually revealing its potential impact.
Saylor's Bitcoin reserve strategy
Saylor's Bitcoin reserve strategy can be summarized in two core points:
Selling stock options for profit: Saylor sets the exercise price between 30% and 300% of the current stock price by selling MSTR stock purchase or conversion options, collecting profits in advance. This strategy is mainly achieved through issuing convertible bonds and preferred stocks (such as STRK and STRF).
Flexible stock issuance: Utilizing the ATM (At-the-Market) mechanism, Saylor issues additional MSTR stock when market conditions are favorable to further raise funds. Notably, he has not explicitly planned to repay the principal of these options or bonds, but hopes to maintain the long-term operation of the financing plan under the condition of paying interest, until MSTR's stock price rises to the relevant exercise price.
This flexible financing method allows Saylor to choose the best fundraising tools based on market conditions. Although there are concerns about his high leverage risks, data shows that Saylor's use of leverage is actually very limited, and the cost of debt is extremely low.
Comparison of Bitcoin reserve strategy and traditional banking models
Saylor's Bitcoin reserve strategy has similarities to the operational model of traditional banks.
Traditional banks amplify leverage to increase returns through a fractional reserve system, but this can also lead to bankruptcy risks. Saylor's strategy avoids excessive leverage because, once problems arise, the government will not provide bailouts similar to those for the banking industry.
After raising funds, Saylor uses the money to purchase Bitcoin rather than government-supported debt.
The core goal of this model is to achieve profits through capital appreciation of Bitcoin, with investors benefiting from the volatility of Bitcoin prices.
Future potential
As a staunch advocate of the Bitcoin reserve strategy, Michael Saylor has successfully attracted many companies to follow suit and prompted the U.S. government to begin exploring similar reserve strategies.
The continuous rise in MSTR and Bitcoin prices further propels the market's recognition of the Bitcoin reserve concept.
Just as Saylor stated in a post on X on May 22
"No one has ever lost money by buying Bitcoin"
