MicroStrategy, led by Michael Saylor, has unveiled plans to purchase $42 billion worth of Bitcoin [BTC] over the next three years, just ahead of the 2028 halving cycle.
“Today, we are setting a strategic target to raise $42 billion in capital within the next 3 years, split into $21 billion in stocks and $21 billion in fixed income securities, a program we refer to as the “21/21 Plan.”
This move solidifies Saylor’s extremely bullish outlook on BTC, anticipating the asset to potentially reach anywhere from $3 million to $49 million in the next two decades. Furthermore, he has voiced his support for Trump’s pro-crypto stance, particularly advocating for the removal of the capital gains tax on BTC.
Is MSTR Transitioning to a BTC ETF?
By October 2024, MicroStrategy had amassed 252, 220 BTC at a cost of $9.9 billion. With current BTC prices, the company’s Bitcoin holdings are now valued over $18.15 billion, resulting in unrealized gains of around $8 billion.
Part of the $42 billion Bitcoin acquisition strategy involves a $21 billion at-the-market (ATM) stock issuance scheme, leading some analysts to speculate that MicroStrategy’s stock, MSTR, could essentially become a BTC ETF.
According to Quinn Thompson, the founder of Lekker Capital, a macro-focused crypto hedge fund,
“By unveiling such a substantial ATM shelf, they are essentially transforming $MSTR into a de-facto ETF.”
This approach would enable MicroStrategy to issue stocks in the secondary market whenever needed to finance its Bitcoin purchases, resembling the operations of US spot BTC ETFs. Thompson believes this move could further enhance MSTR’s performance.
The equity program, coupled with the plan to issue convertible notes to acquire BTC, encapsulates the company’s vision of evolving into a ‘Bitcoin bank,’ unveiled in mid-October.
Consequently, shareholders of MSTR appear to be the primary beneficiaries of this recent development. Since adopting the BTC strategy in 2020, MSTR has been the top-performing stock in the S&P, outshining many others, potentially overshadowing the firm’s Q3 loss of $19.4 million.
Year-to-date, MSTR has surged by +250%, surpassing BTC’s 60% gains by more than fourfold. In Q3, MSTR experienced a growth of approximately 20%, while BTC closed the quarter with minimal gains under 1%.
From an investment perspective, holding MSTR has been more lucrative than BTC.
Interestingly, the stock is anticipated to see an additional 7% increase post the latest earnings report, as highlighted by Jeff Park, the head of alpha strategies at Bitwise. Referencing MSTR options data, Park mentioned,
“Heading into the $MSTR earnings, there is a potentially explosive situation: November 1st volatility stands at around 115%, suggesting a 7.2% shift.”
Currently valued at $247, MSTR’s future trajectory remains uncertain, particularly concerning whether it will hit a new annual peak as projected by Park amid BTC’s steady consolidation above $72K.