Key insights
- The post questions the sustainability of MicroStrategy's (STRC) high-yield debt strategy, where funds are used to purchase Bitcoin. It suggests the returns are potentially funded by new investors, resembling a Ponzi scheme. A potential unwinding of this strategy could negatively impact MicroStrategy's stock and the broader cryptocurrency market, though the direct impact on US equities is limited unless it triggers wider contagion.
I know this isn't a classic value type post but it might be a little more interesting than the various pump and dumps or tickers that are on continuous repeat (looking at you UNH, Gamb, PYPL) and I think this sub has more members that are long in the tooth.
So STRC pays 11.5 percent currently. Your reward for lending Saylor money to buy BTC. The question is, how long can this keep up? There are 5 or 6 of these funds at the moment. The core business makes no money with the premise of never selling any of its BTC. The only way to pay this type of return is by using money from incoming investors is it not?
Im not a BTC fan and as such have not done an extreme deep dive into the space. On the surface, it looks to me like something that will eventually have a major liquidation. Anyone in here have an insight or opinions on this?