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MSTR stock vs. bitcoin

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Oct 3, 2017
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This is surely nothing new but I'd like to hear what you think about the idea of buying MSTR instead of BTC.
It's definitely a complex decision but to point out a few key things to consider:
- MSTR is massively (totally perhaps) correlated with BTC price
- MSTR might be acceptable conservative exposure in certain scenarios where BTC is not an option for various reasons
- personal gains from crypto are mostly taxable (at rather high rate) while in some jurisdiction time test for long-term holding of securities is applied and this difference might be pretty significant
- MSTR involves third party risk
- owning stock involves no controversy, compliance and banking issues, low profile, socially acceptable

Feel free to replace MSTR with GBTC - the question stands.

No need to open discussion about whether to invest into BTC at all or whether it is created and controlled by evil banks 😀 - let's assume one is sure it's a good idea.

What are your thoughts?
 
Yeah that has worked well, but I'd prefer MSTR over GBTC because Saylor actually holds‌ the Bitcoin.
+ You can use options to hedge which is great because you can‍ limit your risk
 
ohh, sorry, it didn't cross my mind... MSTR is Microstrategy - american publicly‌ traded company, holder of more than 120k BTC on it's balance sheet and it's majority‍ shareholder and former CEO Michael Saylor is holding another 17k BTC privately (maybe the numbers⁠ are not accurate or up-to-date, it's unimportant anyways)
the rest is easy to google, worth⁤ paying attention to Saylor's approach in my opinion
 
Well, Saylor quoted the reasons for doing this in︄ his interview with GeorgeGammnon.
Apparently, that was their intention since the company kinda reached end︅ of lifecycle.

Its worth if you need / want exposure but cannot and do not︆ want to think about custody and execution risk of buying these "evil and soon to︇ be irrelevant" (quote ecb) 😉 digital assets.
Its worth if you have captured cash inside your︈ retirement plans and can invest that into shares.

However mstr has a balance sheet, key︉ decision leaders and company gurus (strong leader figure etc) and is a company which comes︊ with all its own risks which apply to every other company.
while btc is not︋ (and like Gold or some other commodity).

The question is what happens when banks will︌ start easy and widespread custody solutions for btc? It would kinda make mstr obsolete.
 
you know it's not an accurate analogy 🙂

it's more like the difference between‍ purchase of 1000 bottles of wine and storing them in your own cellar and buying⁠ share in wine production company having 1M bottles in their cellars and getting an opportunity⁤ to save 25% on taxes if you sell in future

as always, quid pro quo,⁣ interesting mental exercise

I know - this interview made me consider it again after︁ playing with the idea about a half a year ago - but I'm more interested︂ in constructive opinions of others than Saylor's
 
Afaik he is correct. If you︀ have captive capital (in retirement funds etc.) or cant work your way thru the banking︁ maze with it, cant or do not want to store it, then it can make︂ sense.
It is also not a 0/100 thing, you could always just mix it in︃ like 5% or so...
 
by all means, I thought it's obvious‍ that I'm not thinking about all in MSTR...
and the tax incentive is not negligible⁠ - however several downsides are obvious
 
true, but they create cashflow from‌ their primary business to buy it

anyways, I'm not trying to advocate it - just‍ seeking opinions and yours apparently is "stay away and buy the wine", fair enough
 
A little off-topic here:

A guy I had a chance to speak with (after a‌ couple of beers), who is an investment banker at high profile bank in London, told‍ me that his clients that are interested in crypto where buying COIN stock (CoinBase stock,⁠ also publicly traded company in US).

For investors that was the easiest way to get⁤ exposure to crypto without having to deal with owning the actual crypto. They where advising⁣ their clients to have 2-5% of their portfolios in Crpyto but some decided to just⁢ invest in Coinbase as they found that this was easier for them. The idea was︀ that even if BTC down Coinbase is going to make money from the trades. That︁ was back in summer of 2021 when BTC was skyrocketing.

But then the BTC started︂ going downhills and the COIN stock price went along and it's price went from about︃ $320 to about $32.

Long story short:
  1. BTC is down about 75% from it's ATH︄ while COIN is down about 93% - so all investors that invested at that time︅ took a big hit!
  2. Owning a COIN or MSTR is not the same thing as︆ owning actual crypto and the performance may differ (depending how the company performs and how︇ investors value it's performance and their expectations).
  3. Owning a stock is much easier and acceptable︈ by banks

Bitcoins also do not︉ produce any new value (unlike companies).
It's pure price speculation - like with commodities (price︊ of oil, gold or corn).
You buy an asset hoping that the price of that︋ asset will go up so you can sell it.
 
I do not fully agree with this.

But I do fully agree⁣ with this one.
 
Bitcoin also does not have a balance sheet and cannot go bankrupt⁤ like any company. Nor does it has a leadership, which can be put in jail⁣ and stop the company.
It is a commodity with its value being derived by value⁢ transfer across space and time (on longer timeframes correlated with cb balance sheet expansion).
 
That doesn't mean that there are no threats related to Bitcoin - they are⁣ just different. It ca't go bankrupt like a company but what if: binance goes down,⁢ govs and banks ban it entirely, super computers hacks etc.

Do you really think that︀ Coca Cola will ever go bankrupt?

EDIT: Anyways, I think we went way off topic.︁ It's normal that we don't fully agree on everything and everyone has it's different point︂ of view on Bitcoin and that's okay.
 
Banning commodities does not work in the real world. There are countless examples. Without going in⁠ too deep, dolar blue in Argentina is an example.
Binance came way after Bitcoin, it⁤ would not mark the end of Bitcoin. However, that threat seems to have died down⁣ right now, same with tether. But if it is to happen in the future, it⁢ would be the next capitulation event. Maybe due in the next downturn, 2025+
No, low probability.
Spot on.
 
Well to be⁠ fair to coke, they have a strong business model with tons of brands, same applies⁤ to Nestle, and to some pharma companies which have not been involved in recent medical⁣ treatments.
Before they go down, Id bet on many others to tank before them.

But its @JimBeam who brought these points up. As a conclusion, Id just want to stress⁢ Bitcoin does not have a balance sheet and hence won't go bankrupt.
 
I doubt it will get banned in a direct way as⁢ it's hard (or impossible to do) but they can make it difficult or illegal.
Binance came after but it's market share is huge and if it goes down it will︀ have such a huge and long lasting impact on the whole market. (hopefully that will︁ not happen). Many ppl have already got burned (by Luna, FTX etc) and will never︂ go back to Crypto and these are the early adopters and tech savvy people.

My point was, that historically speaking Bitcoin has︃ more chances to fail than a company like KO.
It's company that's around for a︄ 100 years or so, and whole world knows it ad uses it (and it's market︅ cap is about 50% lower than Bitcoin's).

You're right - Bitcoin can't go bankrupt -︆ but there are other threats.
So the risk is high but the reward can also︇ be high.

NOTE:
I own both crypto and stocks.
I'm in crypto for a long︈ time and I started mining Bitcoin when it showed up and when it's price was︉ $2 and I had to store the whole blockchain on my computer to use a︊ wallet etc.
 
Early adopters got burned by gox and some others and learned a precious lesson there.︀ FTX users where clearly a different bunch and not early adopters. Why would one use︁ these newbie companies over the long-lasting alternatives...
It was just good to gamble and not︂ trusting them until they establish credibility.
All of the old ones stand as of today,︃ including tether which should have died 100 times over this year.

People come back when︄ the hype returns and numbers go up in sick percentages. Its normal. It will all︅ be forgotten by then.
yes, but bitcoin is not a company. It needs to be︋ compared to commodities, e.g. gold which has +/- 10T market cap.
 
The ownership of the "physical" asset *Bitcoin > MSTR stock

One of the main reasons‌ of Bitcoin is to put ownership of money back into the people, while someone else‍ holding the "MSTR/GBTC etc. shares" that you "believe" you own is actually going the wrong⁠ way, again.

"Not your keys not your coins", simple.
 
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