CW48: Bitcoin Smashes ATHs While MicroStrategy Goes All In
From record-breaking Bitcoin runs to MicroStrategy’s “Ponzi Math” and Blackrock's big options move
Good morning and welcome to the second edition of the Berglinde Briefing!
Bitcoin is back in the headlines, breaking all-time highs and sparking renewed institutional interest. This week, we take a deep dive into the wild premium behind MicroStrategy’s stock, crunching the numbers on its equity-fueled Bitcoin buying spree. Spoiler: the math might surprise you.
We’re also looking at IBIT’s first steps into options trading—an exciting development for institutional players navigating this rapidly evolving market.
Let’s get into the action. This one’s a must-read!
What we are talking about today
News Flash: Institutional Race Heating Up, the Math Behind MicroStrategy’s Buying spree and Nasdaq Introduces Options for BlackRock's IBIT ETF
Graph Of The Week: Availability of Bitcoin on Exchanges Decreases
Deep Dive Resources: “Bitcoin for financial experts” - live course by 21 Lectures
Meme Of The Week: Don’t be that guy - read the Berglinde Briefing
Flash 1: Institutional Race Heating Up
This week saw notable institutional activity in the Bitcoin market:
MicroStrategy announced the purchase of an additional 51,780 BTC for a significant $4.6 billion, further solidifying its position as a major corporate holder of Bitcoin. They also plan to buy an additional $2.6 billion worth of BTC with a convertible bond offering.
Marathon Digital Holdings (MARA) is in the process of raising $700 million through a convertible bond to further invest in Bitcoin.
Semler Scientific has continued its Bitcoin treasury strategy by recently acquiring 215 BTC after its initial investment, showcasing its commitment to holding Bitcoin as a primary reserve asset.
Japanese Metaplanet issues ¥1.75bn debt offering to buy more Bitcoin.
The recent uptick in institutional Bitcoin acquisitions underscores a pivotal shift in the financial landscape. As companies like MicroStrategy lead the charge, and others like Semler Scientific follow suit, there's a clear trend towards integrating Bitcoin into conventional investment portfolios. Even with ETFs entering the fray, it's evident that Bitcoin is transitioning from a fringe asset to a staple in the diversified treasury strategies of forward-thinking companies.
Flash 2: the Math Behind MicroStrategy’s Buying spree
Current Scenario: MicroStrategy’s MSTR 0.00%↑ stock trades at an eye-popping 256% premium to its Bitcoin holdings, with a market cap surpassing $100 billion. This premium is partly attributed to investors seeking Bitcoin exposure but restricted by regulators from buying Bitcoin ETFs.
Why the Premium?
Regulatory Constraints: Investors seek MSTR 0.00%↑ as an alternative to direct Bitcoin investment due to regulatory limitations in some markets.
Strategic Expansion: MSTR issues shares at this premium to buy more Bitcoin, aiming to increase Bitcoin per share. Michael Saylor refers to that metric as Bitcoin yield.
Financial Engineering Insight: BitMEX Research suggests MSTR would need to issue 157 million shares to match its stock price with Bitcoin value per share, potentially leading to a $674 billion market cap and holding nearly 1.9 million BTC.
Conclusion:
Investment Consideration: The premium reflects equity investors basically begging MSTR to issue more shares to invest in Bitcoin and hence doubling down on its Bitcoin treasury strategy.
Risks: The premium's sustainability is a key concern, as a drop could impact MSTR's approach if Bitcoin's price doesn't rise as expected.
MicroStrategy's case is a compelling study for financial professionals interested in the intersection of traditional equity markets with Bitcoin, providing both opportunity and risk in investment strategy formulation.
BitMEX Research has made all their calculations accessible in this publicly available Google Sheet.
Flash 3: Nasdaq Introduces Options for BlackRock's IBIT ETF
Nasdaq has started listing options for BlackRock’s Bitcoin ETF (IBIT) last Tuesday. This marks yet another milestone in the professionalization of Bitcoin as an asset class.
Options bring a new layer of sophistication to Bitcoin investing, providing institutional and professional investors with powerful tools for hedging, risk management, and strategic exposure. Whether you want to mitigate downside risk, leverage positions, or execute complex trading strategies, options unlock a level of flexibility that’s been standard in traditional markets but is now making its way to Bitcoin.
For financial professionals, this development not only expands the range of tradable products but also signals growing confidence and maturity in Bitcoin’s market infrastructure. The introduction of options is more than just another product—it’s a strong vote of confidence from mainstream financial institutions that Bitcoin is here to stay.
Not surprising, the launch was a huge success and the market sentiment also goes in a very clear direction:
For our German speaking readers, we highly recommend the explanation video of Florian Bruce on his “Der Bitcoin Podcast” (which is anyway a must listen):
Balance of Bitcoin on exchanges is dropping during a bull market - for the first time ever
In an intriguing market development, the availability of Bitcoin on exchanges has decreased during the bull run, contrary to historical trends where increased prices have usually correlated with higher exchange reserves. This shift suggests a strong holding pattern among investors, potentially signaling increased confidence or a strategic squeeze on supply amidst rising demand.
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Don’t be that guy - read the Berglinde Briefing
