MSTR stock vs. bitcoin

[void]

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?

 

[hlepic211]

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

 

[JohnLocke]

void said:
Feel free to replace MSTR with GBTC - the question stands.
Click to expand...

For all of us not knowing what MSTR is, please elaborate!

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[void]

James Spader said:
For all of us not knowing what MSTR is, please elaborate!
Click to expand...

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

 

[JackAlabama]

void said:
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?
Click to expand...

Well, Saylor quoted the reasons for doing this in his interview with GeorgeGammnon.
Apparently, that was their intention since the company kinda reached end of lifecycle.

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

However mstr has a balance sheet, key decision leaders and company gurus (strong leader figure etc) and is a company which comes with all its own risks which apply to every other company.
while btc is not (and like Gold or some other commodity).

The question is what happens when banks will start easy and widespread custody solutions for btc? It would kinda make mstr obsolete.

 

[JohnnyDoe]

It's a bit like asking: do you prefer drinking a good bottle of wine or paying someone to drink it and tell you how good it is?

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[void]

JohnnyDoe said:
It's a bit like asking: do you prefer drinking a good bottle of wine or paying someone to drink it and tell you how good it is?
Click to expand...

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

JackAlabama said:
Well, Saylor quoted the reasons for doing this in his interview with GeorgeGammnon.
Apparently, that was their intention since the company kinda reached end of lifecycle.
Click to expand...

I know - this interview made me consider it again after playing with the idea about a half a year ago - but I'm more interested in constructive opinions of others than Saylor's

 

[JackAlabama]

void said:
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 after playing with the idea about a half a year ago - but I'm more interested in constructive opinions of others than Saylor's
Click to expand...

Afaik he is correct. If you have captive capital (in retirement funds etc.) or cant work your way thru the banking maze with it, cant or do not want to store it, then it can make sense.
It is also not a 0/100 thing, you could always just mix it in like 5% or so...

 

[void]

JackAlabama said:
It is also not a 0/100 thing, you could always just mix it in like 5% or so...
Click to expand...

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

 

[JohnnyDoe]

void said:
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
Click to expand...

MSTR doesn't produce bitcoins.

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[void]

JohnnyDoe said:
MSTR doesn't produce bitcoins.
Click to expand...

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

 

[JohnnyDoe]

void said:
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
Click to expand...

My point is if you like MSTR for whatever reason buy it. If you like bitcoin, buy bitcoin (which is way simpler, can be done quickly, without DD, it can't be stolen/frozen, it's private etc.)

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[JimBeam]

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 was that even if BTC down Coinbase is going to make money from the trades. That was back in summer of 2021 when BTC was skyrocketing.

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

Long story short:

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

JohnnyDoe said:
MSTR doesn't produce bitcoins.
Click to expand...

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

 

[JohnnyDoe]

JimBeam said:
Bitcoins also do not produce any new value (unlike companies).
Click to expand...

It is much more than production of “new value”.

JimBeam said:
It's pure price speculation - like with commodities (price of oil, gold or corn).
Click to expand...

That's just one (legitimate) way to look at it. As a commodity, it has an intrinsic value.

JimBeam said:
You buy an asset hoping that the price of that asset will go up so you can sell it.
Click to expand...

Or you buy it for its intrinsic value and usage. For example, you buy oil for running your car and heating your house, not necessarily for speculation.

JimBeam said:
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).
Click to expand...

Here is another example of the idiocy of bankers.

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[JimBeam]

JohnnyDoe said:
That's just one (legitimate) way to look at it. As a commodity, it has an intrinsic value.

Or you buy it for its intrinsic value and usage. For example, you buy oil for running your car and heating your house, not necessarily for speculation.
Click to expand...

I do not fully agree with this.

JohnnyDoe said:
Here is another example of the idiocy of bankers.
Click to expand...

But I do fully agree with this one.

 

[JackAlabama]

JimBeam said:
Bitcoins also do not produce any new value (unlike companies).
It's pure price speculation - like with commodities (price of oil, gold or corn).
You buy an asset hoping that the price of that asset will go up so you can sell it.
Click to expand...

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).

 

[JimBeam]

JackAlabama said:
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).
Click to expand...

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 that 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 point of view on Bitcoin and that's okay.

 

[JackAlabama]

JimBeam said:
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.
Click to expand...

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+

JimBeam said:
Do you really think that Coca Cola will ever go bankrupt?
Click to expand...

No, low probability.

JimBeam said:
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 point of view on Bitcoin and that's okay.
Click to expand...

Spot on.

 

[JohnnyDoe]

JackAlabama said:
No, low probability.
Click to expand...

Like Enron, Bear Stearns, Man Financial etc”¦
Suggested reading: The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility": 2 (Incerto): Amazon.co.uk: Taleb, Nassim Nicholas Nicholas: 8601404990557: Books

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[JackAlabama]

JohnnyDoe said:
Like Enron, Bear Stearns, Man Financial etc”¦
Suggested reading: The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility": 2 (Incerto): Amazon.co.uk: Taleb, Nassim Nicholas Nicholas: 8601404990557: Books
Click to expand...

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.