MicroStrategy's Bitcoin strategy
MicroStrategy has purchased more Bitcoin, increasing total holdings to 582,000 $BTC , equivalent to over $60 billion USD, with all purchases since 2020 being profitable. According to Saylor, the company is not just an investment fund or ETF, but operates as a business with a financial strategy revolving around Bitcoin, including:
Issuing Bitcoin-collateralized credit instruments: MicroStrategy is the world leader in issuing Bitcoin-collateralized credit instruments, with three types of preferred stocks (STRK, STRD, STRF). These instruments raise long-term, low-risk capital without diluting common stock.
Using Bitcoin as collateral: The company collateralizes Bitcoin to borrow funds at low cost, with no repayment required in many cases, then uses this capital to buy more BTC, creating an optimized profit cycle.
Generating impressive profits: In the first half of 2025, MicroStrategy reported $8.4 billion USD in profits from Bitcoin, aiming for $15 billion USD for the entire year. Saylor believes that if applying a valuation multiple of 10-20 times, the company's value will far exceed its net asset value (NAV).
Saylor rebuts Jim Chanos, who claims that MicroStrategy's stock (MSTR) is overvalued. He asserts that Chanos does not understand the company's business model, which offers higher returns, better tax efficiency, and superior liquidity compared to ETFs like Invesco PGX. The preferred shares of #MicroStrategy , fully collateralized by Bitcoin, help the company maintain a higher stock price than NAV.
Market context and MicroStrategy's position
The crypto market is in a strong growth phase, with Bitcoin fluctuating around $105,000 and the crypto market capitalization reaching $2.2 trillion USD. Over 120 listed companies, including GameStop and American Bitcoin, have established Bitcoin treasuries, according to Bitcointreasuries.net, inspired by MicroStrategy – the company with the largest corporate Bitcoin treasury in the world (582,000 BTC, accounting for more than 1/3 of the total corporate Bitcoin treasury).
Support from major institutions like BlackRock (Bitcoin ETF) and the crypto-friendly policies of the Trump administration, such as the Strategic Bitcoin Reserve proposal and the GENIUS Act, facilitate MicroStrategy's strategy. Additionally, the new Bitcoin supply from mining is only about 448 BTC/day (~$48.6 million USD) which is fully absorbed by ETFs and companies like MicroStrategy, creating long-term upward price pressure.
MicroStrategy also leverages the trend of integrating crypto into traditional finance, with companies like Invesco ($1.6 billion USD in crypto portfolio) and Interactive Strength (FET treasury of $500 million USD) joining the market. However, MicroStrategy's Bitcoin collateralization strategy carries risks if Bitcoin prices drop sharply, although Saylor claims the company has sufficient resources to manage volatility.
Impact on the crypto market
MicroStrategy's strategy could create widespread impacts:
Increasing demand for Bitcoin: The additional purchases of Bitcoin and absorption of new supply from mining reinforce upward price pressure, potentially pushing Bitcoin above $112,000 (05/22/2025). With a fixed supply of 21 million BTC and many coins lost, Bitcoin is becoming increasingly scarce, as noted by Mike Novogratz.
Encouraging the corporate crypto treasury model: The success of MicroStrategy inspires companies like GameStop ($512 million USD in Bitcoin) and DDC Enterprise (138 BTC), promoting Bitcoin adoption in corporate finance.
Increasing institutional confidence: MicroStrategy's financial model, combining Bitcoin with credit instruments, could attract more institutional investors, especially as Bitcoin ETF and stablecoin ($154 billion USD market cap) are growing rapidly.
However, investors need to be aware of the risks from Bitcoin price volatility and legal factors. Although the GENIUS Act has the potential to be passed, the CLARITY Act market structure bill is unlikely to reach consensus in 2025, which could cause instability in the crypto market.
Suggestions for investors
Focusing on Bitcoin: Bitcoin is a safe asset to leverage the trend of institutional accumulation. Companies like MicroStrategy can drive prices up in the short term.
Monitor MicroStrategy stock (MSTR): The MSTR stock has potential for growth due to the Bitcoin strategy, but risks need to be assessed if the market adjusts. Compare with ETFs like Invesco PGX to find investment opportunities.
Investing in related blockchains: Platforms like Ethereum ($2,491) and Solana ($510) support DeFi and NFTs, and may benefit from the corporate crypto trend. Monitor tokens like FET ($1.35) or ADA ($0.39) to diversify the portfolio.
Caution with risks: Price volatility and legal uncertainties in the USA, particularly from the SEC, require prudence. Monitor developments regarding the GENIUS Act and Trump's policies to adjust strategies.
Risk warning: Investing in cryptocurrencies carries high risk due to significant price volatility.