MicroStrategy's recent operation makes the term 'overheated' seem too mild. On one hand, they are issuing more stocks to buy $BTC ; on the other, they are mortgaging the Bitcoin they bought to continue financing, and then issuing more stocks... This is no longer ordinary FOMO (fear of missing out); it resembles a set of 'left foot stepping right foot flying technique,' continuously drawing circles in mid-air. As long as Bitcoin keeps rising, no one can expose it. But the problem is, the market never follows the script.
From this financial report, in the first quarter, due to the drop in Bitcoin prices, the company recognized a loss of 4.2 billion dollars, equivalent to a loss of 16.49 dollars per share. At the same time, MicroStrategy announced a plan to initiate a 21 billion dollar common stock issuance program to continue buying BTC, raising the BTC yield target from 15% to 25%, and increasing the revenue target from 10 billion to a staggering 15 billion—doesn't this count as 'increasing faith'? But the problem is, their asset volatility fundamentally relies on BTC, and the core business has long been submerged in virtual asset investments. To some extent, it is no longer a software company but a leveraged 'quasi-ETF' Bitcoin position operating under the guise of a listed company.
You think they are investing, but in fact, they are alchemizing. The money from stock financing is used to buy coins, and when the coins rise, they continue to mortgage for financing to buy more coins. It sounds beautiful, but in reality, it is multiple leverages snowballing. In other words, MicroStrategy's growth model is deeply bound to the coin price. If the coin rises, everything is fine; if it falls, it feels like stepping on a paper bridge, collapsing layer by layer.
The most critical point is that this structure is no longer just 'their own business.' Currently, MicroStrategy holds over 550,000 BTC, accounting for 2.6% of the total circulating supply. Once this position collapses, it won't just be a total loss for them; the entire market will tremble along with it, potentially becoming the trigger for a new round of crypto market stampede. It is not just a bomb; it is a 'super bomb' capable of triggering a secondary confidence crisis.
From a regulatory perspective, this kind of play clearly walks the gray area. In traditional finance, a listed company would be heavily scrutinized by the SEC for continuously issuing shares to speculate on a highly volatile asset or for repeatedly financing against assets it bought back. However, the current crypto market is in a regulatory gray zone; this model not only circumvents the compliance restrictions of ETFs but also takes advantage of the financing convenience of listed companies, making it a 'market arbitrage genius' in the gaps between traditional rules and new finance.
Of course, we cannot completely deny MicroStrategy. They have indeed transformed 'Bitcoin faith' into a corporate strategy in an extremely aggressive way, and their influence far exceeds that of many crypto-native companies. However, the issue is that once this model enters a bear market, it may not only backfire on MicroStrategy but could also lead to a collapse of confidence in holdings. If the previous FTX was an exchange version of a trust crisis, then MicroStrategy might be the next bomb in the version of listed companies.
Investment itself has no right or wrong, but from the perspective of MicroStrategy, the more genuine the belief, the harsher the leverage, and when it falls, the more painful it is.
