MicroStrategy speculative attack on the dollar
The guest argued that MicroStrategy's strategy of borrowing cheap fiat capital to acquire Bitcoin represents a highly intelligent financial arbitrage that is positioned to outperform spot Bitcoin.
The argument
The speaker defended Michael Saylor's strategy against market criticism, explaining that borrowing at 11% to 12% to buy an asset growing at a 30% to 40% annual rate of return creates immense value for shareholders. He noted that while the company's 'Stretch' preferred shares recently suffered a leveraged cascade down to $83, they are highly likely to return to par ($100) given the well-covered dividend.
The thesis, stress-tested
✓ What validates it
- ✓Stretch preferred shares returning to par value of 100
- ✓MicroStrategy's Bitcoin annual rate of return remaining above 20% to 30%
▸ Risks discussed
- ▸A systemic technical failure or halt in global Bitcoin adoption
- ▸Deep drawdowns causing forced liquidations of leveraged market participants
- ▸Potential over-dilution if shares are issued at unfavorable net asset value premiums
Hear it yourself
"So so I was wrong, but I don't think I'm entirely wrong longer term. I think he's ultimately gonna have to crump and and cut rates. Now his whole balance sheet reduction thing and that he also, you know, calmed the bond market by saying he intended to do that, you know, I'm not sure I don't think he can do that. You know, that's where I part ways with this whole fed is that they, you know, they are a machine for creating money. If, you know, I've had a chart that I put up on Twitter a lot that shows the growth of debt and the growth of GDP, and that the two lines are separating because debt is growing faster than GDP."
07:45
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