cornering the market for issuing Bitcoin-backed securities

If you think MSTR is overvalued because it’s just Saylor raising money to buy BTC, you’re missing the bigger picture. 

That’s not what he’s doing. 

According to Saylor, “public companies exist to issue securities”.

What Saylor is doing is cornering the market for issuing Bitcoin-backed securities. 

Saylor is operating on a Bitcoin Standard. He knows that the player with the biggest stash of BTC, with the most liquid and volatile stock, with the deepest options market, will be able to issue the most securities backed by bitcoin. Forever. 

What kind of securities?

Saylor is creating securities for several cohorts. Fixed income investors want low or no downside risk with a call option on BTC to capture some of its upside. Saylor structures convertible debt securities and sells them to this crowd. They’re gobbling up MSTR converts. 

Equity investors want juiced up BTC on steroids. They’re getting what they want because MSTR is leveraged long BTC. Saylor issues new shares “ATM” (at the money) to this crowd. As a result of their leveraged long structure, MSTR is up 600% in 2024 alone. 

Options traders are getting what they want too. BTC is 4x more volatile than the S&P 500 index. High volatility enables massive yields on the underlying asset. These traders are enjoying the deepest, most liquid BTC backed options market as well. These put and call options allow all market participants to structure BTC backed portfolios that match their risk tolerance. 

The engine powering all of this is Bitcoin’s volatility. While the complaint that BTC is “too volatile” is the most common among plebs and wall street alike, Saylor put on his engineering hat and figured out how to harness BTC’s volatility to issue a range of securities rapidly, generating a tremendous BTC yield for MSTR shareholders. 

You are witnessing the volatility of Bitcoin, harnessed, molded and shaped to allow each cohort of investor to get exactly what it wants. 

As long as BTC remains volatile, (barring a 95% drawdown in a week or less) the MSTR flywheel should continue to work.