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Saylor's Gambling Debt And Other Crypto Market Thoughts

MSTR Diluting Shareholders
Before, you got "BTC Yield" through the following loop: MSTR trades rich to BTC NAV -> Saylor does ATM offer (issuing and selling new shares) to buy BTC -> BTC/share goes up.  This was good for the shareholder.

Now, these offers are mostly to fill the USD reserve to pay out STRC and other preferreds.  This is siphoning value from MSTR to dilute shareholders, plummeting mNAV (chart attached) and potentially causing shareholders to pull out.

STRC Is Mostly Finished Anyways
STRC was issued around $100 with an 11.5% dividend/coupon, plus a supposed "price stability" mechanism meant to keep it near par: raise the coupon if STRC trades below $100, lower it if it trades above $100.  This is discretionary and has not been fulfilled even as STRC trades at $75, so it is clear there is no intent to defend $100 anyways.

If STRC falls because of MSTR's credit risk, MSTR may need to raise the coupon, and that higher cash burden can worsen credit risk further, creating a spiral.

11.5% Is A LOT Of Juice
The setup is analogous to perpetual futures, which have an artificial ~11% APY funding bias added to benefit MMs doing cash and carry.  In the history of perps, almost all the money has flown to MMs - being long is the sucker bet unless its the start of a crazy run or you have inside information.  The juice you pay is simply too high, especially on an asset languishing that does not have a reasonable chance to generate outsized returns.  After all these years of experience, Saylor still fell for the most famous extraction method in crypto - getting soft liquidated on 11% APY "perps" and becoming a forced seller.

It's Not 2020 Anymore
Bitcoin has been flat for 5 years, which is unprecedented. Prior cycles twice had Bitcoin out of the hole in 3 years. Ethereum's PA may preview what happens to Bitcoin when you have an asset flat for 5 years. People wonder why they are holding with no returns, especially in the wake of tech, AI, robotics and space stocks.

Waning Belief in Bitcoin
People don't have the same level of belief in Bitcoin anymore, and the belief seems to be shrinking not growing.  This is bearish as Bitcoin needs to hold firm the social meme that "this is something worth storing your wealth in for a long time", similar to gold.  This is the most important hurdle and far bigger than the quantum overhang or any other problems with Bitcoin. It's the simple question: do people actually want Bitcoin?

It's amusing that at the beginning of this cycle we all thought the US Govt buying Bitcoin would be very bullish for BTC.  Now it seems even if they bought, it would simply be the last pocket of exit liquidity.  There are simply no more "suckers" to sell to (people that buy hoping they can sell it higher or holds value), and fewer and fewer people really believe in it.

My Base Case
I think this dumps one more leg corresponding to MSTR's actions, but in total not as hard as people think. This is because smart money is aware, and the bulk of the supply is very slow acting, those people are mostly willing to ride or die with Bitcoin, similar to retail in 2021 on DOGE.

Before October, I think people playing cycle memes put in a bounce. Then, opposite to "cycles" expectations and popular belief, I think it just languishes (measured by mcap/m2) similar to ghost L1s where it's pretty dead but takes longer than it seems like it should to actually go down.

The Last Drunk In The Room
Saylor is at a party that has passed into dawn, where most people have already wisely left the room, and all that remains are the really drunk people. He has become the "egg guy", a Tom Lee type dancing muppet for Bitcoin, pissing financial jargon mumbojumbo sentences in presentations that obscure the facts. All upside, no downside, no risk, with 11.5% guaranteed yield. Pretty much all smart people knew from the jump that Saylor putting leverage in his book was going to bite him in the ass. Even the peanut gallery. Literally every comment was comparing the structure to Luna and telling him he is retarded.

Zooming out, there is another lesson.  You don't want to be the last drunk in the room, overstaying a good party.  Why fight it out in piss tier zero-sum games when all the fish have left?  The stock market has far higher rewards and the "coins" mostly all go up.

While Saylor sells to pay off his gambling debt, will you own a piece of the dividend paying rocketship, or remain permanently in the underclass?  We're going to Mars with flying cars, and you're still betting on fucking horses? acb