MicroStrategy alts

As this cycle reaches its halfway point, everyone is just realizing that MicroStrategy's strategy of accumulating Bitcoin (BTC) has been emulated by many listed companies and may become a historical driving force for the super Bitcoinization.

Publicly traded companies are increasingly falling into a prisoner’s dilemma of competing for chips. First come, first served; those who come later find it hard to get.

It is reported that listed companies have hoarded nearly 770,000 BTC, and this number is rapidly increasing at a rate of 10,000 coins per month. At this rate, by the end of this year, their total hoarding amount is expected to surpass 1 Satoshi, which is about 1,000,000 to 1,100,000 BTC.

Among them, MicroStrategy alone has hoarded nearly 600,000 BTC. It seems to have found a perpetual motion strategy using the net premium of its own stock to continuously buy more BTC: Buy BTC (BTC, digital gold) => Increase the Bitcoin per share (gold content) => Stock price rises => Issue more shares, obtain financing => Buy more BTC => Repeat the above cycle...

Then it includes other companies, such as Japan's Metaplanet, issuing low-interest or even zero-interest bonds to raise funds from the market, increasing their BTC holdings, injecting additional fuel and power into the aforementioned cycle.

So much so that many people have begun to claim that they will create various copycat versions of MicroStrategy, meaning they will hoard various altcoin micro-strategy models, such as the US-listed company SharpLink Gaming that hoards ETH, etc.

The author suddenly thought of the reverse version of this: a MicroStrategy-style altcoin. Imagine if there is such an altcoin project that has successfully issued an altcoin in the market, whether it is a project coin, a meme coin, or a vaporware coin, the coin itself may not have any actual business value supporting it, just like MicroStrategy's software business is barely sufficient. Then this altcoin project starts to learn MicroStrategy's strategy of hoarding BTC, buying BTC as a strategic reserve for the project, increasing the BTC content per coin to boost the coin price. An increase in the coin price means that the altcoin reserves locked in the project or community treasury can be exchanged for more BTC. Thus, the project begins to sell its own altcoin on the secondary market to acquire more BTC, further increasing the BTC content per coin, and this cycle continues...

So may I ask, does this altcoin have the chance to skyrocket like MicroStrategy's stock price due to the accumulation strategy?

This is not an easy question to answer. It seems that not every company imitating the MicroStrategy model has seen its stock price rise due to accumulating BTC.

In the perpetual motion cycle of MicroStrategy, the most intriguing aspect should be that an increase in the per-share Bitcoin content will lead to a rise in stock price, thus obtaining a net premium, right?

Without net premium, financing cannot be sustained. If financing cannot be sustained, the perpetual motion cycle must be forced to stop. However, the emergence of net premium only comes from the belief of buyers in the secondary market that the future per share Bitcoin content of MicroStrategy will further increase. Thus, this becomes a circular argument.

Especially in the context where there are already many professional BTC spot ETF products in the US stock market, the statement that buyers find it inconvenient to directly purchase BTC and thus choose MicroStrategy as an alternative investment method seems somewhat pale.

Holding an ETF means entrusting the possession of a certain amount of BTC, which is determined by the mechanism of the ETF.

Holding MicroStrategy stock likely requires not only trust in its CEO Michael Saylor's character but, more importantly, belief in his ability to continuously find various ways to issue fewer shares and acquire more BTC.

It can be seen that the emergence of net premium is the condition for its existence. The disappearance of net premium is also likely to be the death knell for it.

The reflexivity of the market makes a stunning debut in an unprecedented way.

Ultimately, why can hoarding coins support stock prices and coin prices, rather than heading in the opposite direction into a death spiral?

I vaguely remember the last person who tried to hoard BTC to support the coin price was Do Kwon, the founder of LUNA.

The speculators targeting LUNA are starting with the BTC positions swapped for LUNA tokens through excessive issuance.

BTC supports LUNA, LUNA supports UST. From the base to the top, the inverted pyramid is on the verge of collapse. Taking away the fuel from the fire, market panic, UST run on the bank, LUNA infinite issuance, coin price rapidly returns to zero.

MicroStrategy's Bitcoin position is currently valued at around 65 billion USD. Its market capitalization in the US stock market exceeds 111 billion USD. This is the current position value, not the net value. Liabilities are not taken into account here.

Maybe from MicroStrategy to LUNA, we just need a product like UST.

If someone is willing to create a meme coin that mimics the MicroStrategy model of hoarding BTC, it would definitely be interesting, right?!

Or every former altcoin, meme coin, and even shitcoin, as long as the whale still holds chips, it seems that they can mimic the MicroStrategy model in hopes of a resurrection effect?