MIAMI, FLORIDA – JUNE 04: MicroStrategy CEO Michael Saylor walks through the Bitcoin 2021 … [+] Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida. The crypto conference is expected to draw 50,000 people and runs from Friday, June 4 through June 6th. (Photo by Joe Raedle/Getty Images)
With over 386,700 BTC in its treasury, Microstrategy has become more than just an innovator in corporate finance. It is now a key bitcoin market player, whose influence extends beyond driving direct BTC demand and helping shape market sentiment. Microstrategy’s bitcoin game is now touching a broader array of financial metrics. This offers valuable insights about market evolution. Notably, the company’s latest 0% debt issuance for further bitcoin purchases shows market enthusiasm and anticipation of heightened volatility.
MicroStrategy’s own stock price has been swinging wildly recently. While bitcoin has risen 135% so far this year, MSTR has surged an extraordinary 740% at its highest point. Just this month, it saw an impressive 142% rally, followed by a 37% plunge within days.
This behavior demonstrates that, while strongly correlated to bitcoin, MSTR price exacerbates its movements, outperforming the leading crypto by over five times. This dynamic is also mirrored in MicroStrategy’s valuation. Despite its bitcoin holdings worth approximately $36.7 billion, MicroStrategy’s current market cap exceeds $92 billion. The gap is too large to be explained by its original software business, which means that MSTR has effectively become a bitcoin volatility amplifier.
How did this transformation happen, and what does it mean for the bitcoin market?
MicroStrategy’s Bitcoin Buying Spree
Founded in 1989 by Michael Saylor, MicroStrategy began as a business intelligence company specializing in analytics software. It later expanded into mobile applications and cloud-based services. The company went public in 1998 with a valuation of $1.12 billion. For more than two decades, its market cap remained relatively stable, averaging around this figure with brief peaks above $2 billion. It was near $1.3 billion in 2020—the year that marked a dramatic pivot in the company’s trajectory.
On August 11, 2020, Saylor announced MicroStrategy’s first Bitcoin purchase: 21,454 BTC at an average price of $11,652. This sparked a buying spree, with the most recent acquisition completed last week, when the company bought 55,000 BTC at an average price of $97,862. Over the past four years, MicroStrategy has spent $21.9 billion to accumulate 386,700 BTC, Michael Saylor detailed in his recent X post. The scale of investment—nearly 2% of Bitcoin’s total supply—is extraordinary and represents a more-than-significant stake in Bitcoin’s ecosystem.
To finance these acquisitions, MicroStrategy has employed a mix of funding strategies, including existing cash reserves, stock offerings, and convertible senior notes.
MicroStrategy’s cash comes from a stable, albeit declining, software business. In 2023, the company declared $496 million in revenue from product licenses, subscriptions, and services. Additionally, MicroStrategy has raised at least $2 billion through newly issued shares sold at-the-market in 2023 and 2024. Moreover, an ambitious plan for a new $21 billion ATM equity offering and a new $21 billion fixed income securities issuance was announced in October. As for convertible senior notes, they have arguably been the most intriguing fundraising method so far.
MicroStrategy’s 0% Debt Suggesting Volatility Ahead
Convertible senior notes are debt instruments somewhat akin to company bonds but with the possibility of converting them into equity. They usually come with a coupon, or a yield paid to investors. Yet, the latest MicroStrategy offering, completed last week, broke the mold in several remarkable ways. First, it was massive in scale, raising $3 billion. Second, the notes carried a 0% coupon, meaning investors lent money to the company interest-free. Furthermore, the conversion price was set at $672, representing a 55% premium over the stock’s price at issuance. This means that if investors do not actively trade these notes, they would profit only if the stock price, currently at $406, exceeds $672. Such optimism reflects a strong bullish sentiment in the Bitcoin market.
However, not all investors are likely to sit and wait for the stock to rise. Some may use their convertible bonds in conjunction with other strategies, which typically involve options. Several trading techniques—including gamma trading, delta hedging, and volatility arbitrage—allow traders to take offsetting positions in different financial products tied to the same underlying asset, enabling them to profit from price discrepancies between those instruments. The key requirement for such strategies’ success, however, is high market volatility.
Microstrategy’s 0% convertible senior notes could be compared to call options, with a $672 strike and 2029 expiry date. This suggests that at least part of the investors are likely to engage in trading games, betting on a volatile market ahead. If their expectations hold, it would mark a significant shift for bitcoin, whose volatility has been steadily declining for the past 3.5 years.
A Corporate Bitcoin Trend
MicroStrategy employs a cyclical approach: issue debt, buy bitcoin, and use the higher stock price to repeat. This approach has drawn criticism, with detractors likening it to a Ponzi-like model due to its reliance on debt and excessive leverage. Critics also point to Bitcoin ETFs as safer alternatives for investors seeking cryptocurrency exposure without directly buying bitcoin.
Supporters highlight MicroStrategy’s diverse revenue streams and low risk from its 0% debt. In an interview with a Brazilian exchange Digitra earlier this year, Michael Saylor argued that MicroStrategy is more than a quasi-fund. It is an operating business that provides investors with flexibility, allowing its stock to be leveraged, borrowed against, or traded as an option.
Saylor’s unwavering Bitcoin advocacy has been boosting investor confidence for years. He has also inspired a growing number of companies to integrate bitcoin into their treasuries. Companies like Semler Scientific, Metaplent, Rumble, Genius Group, and many others now have their own bitcoin strategies. Additionally, the American bitcoin miner Marathon has adopted MicroStrategy’s borrowing method. It has recently announced a 0% convertible senior notes offering, albeit with a smaller premium of 42.6%. Saylor also plans to pitch bitcoin adoption to the Microsoft board, showing how adding BTC to the tech giant’s treasury could enhance its stock stability and reduce risk.
Concerns remain about the sustainability of MicroStrategy’s bitcoin game, as well as the company’s increasing hold on bitcoin’s famously scarce supply. However, there is no denying that Michael Saylor’s vision has redefined corporate finance and opened a new chapter in corporate bitcoin adoption.
