MicroStrategy equity risk at lower Bitcoin prices
The guest argued that MicroStrategy faces structural risk where its equity value could drop to zero if Bitcoin's price falls into the $50,000 range, due to its debt and preferred share obligations.
The argument
The speaker explained that when subtracting debt and preferred obligations from the value of its Bitcoin holdings, the remaining equity stack is highly sensitive. While the risk of liquidation is deemed low (around 2% to 5%), it was framed as a more prescient risk than quantum computing or custody hacks.
The thesis, stress-tested
✓ What validates it
- ✓Bitcoin price drops below $60,000
- ✓MSTR debt covenants or preferred share terms are restructured
▸ Risks discussed
- ▸Bitcoin price falling to the $50,000 range
- ▸Potential liquidation or forced selling of Bitcoin holdings to meet obligations
Hear it yourself
"So by the time we get above 95, every man and his dog is gonna agree it's a bull. I try to work backwards and say, well, if we get through 78 and by the way, I don't expect we'll do this the first time ever. It's always gonna take a series of whacking our head against the ceiling. Get through it at 78. The odds of us going to 85 go up a lot. Mhmm. Once you get above 85, the odds of us going to 95 go up a lot. So it's almost like an exponential increase in the odds. And I'm looking at the way market structure looks at the moment. To my instinct, to my gut feel, I think that 60 was sufficiently bad that scared a lot of people."
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