Key Points
- MicroStrategy plans to purchase $42 billion worth of Bitcoin within the next three years.
- This move may transform MSTR into a Bitcoin ETF, similar to US spot BTC ETFs.
MicroStrategy, led by Michael Saylor, has revealed its intention to buy $42 billion of Bitcoin (BTC) over the next three years, prior to the 2028 halving cycle.
The company stated, “Today, we are announcing a strategic goal of raising $42 billion of capital over the next 3 years, comprised of $21 billion of equity and $21 billion of fixed income securities, which we refer to as our “21/21 Plan.”
Transforming MSTR into a Bitcoin ETF
As of October 2024, MicroStrategy held 252, 220 BTC, bought for $9.9 billion. The company’s Bitcoin stash is now valued at over $18.15 billion, translating to $8 billion in unrealized gains.
A significant portion of the company’s $42 billion Bitcoin acquisition plan will be executed through a $21 billion ATM (at-the-market) stock issuance program. Some analysts believe this move will transform MSTR into a Bitcoin ETF.
Quinn Thompson, founder of macro-focused crypto hedge fund Lekker Capital, commented, “By ripping the bandaid off and announcing a massive ATM shelf like this, they are turning $MSTR into a de-facto ETF.”
This strategy would enable MicroStrategy to issue stocks in the secondary market to fund its Bitcoin acquisition, mirroring the operation of US spot BTC ETFs. According to Thompson, this could potentially enhance MSTR’s value.
MicroStrategy’s Vision of a ‘Bitcoin Bank’
The firm’s equity program, coupled with the plan to issue convertible notes (debt) to purchase Bitcoin, encapsulates MicroStrategy’s long-term goal of becoming a ‘Bitcoin bank.’
Since adopting the Bitcoin strategy in 2020, MSTR has been the best-performing S&P stock, even outperforming Bitcoin’s 60% gains with a +250% increase on a year-to-date basis.
Jeff Park, Bitwise’s head of alpha strategies, noted a potential 7% rally for the stock following the latest earnings report. At the time of writing, MSTR was valued at $247. Its future performance remains to be seen in light of Bitcoin’s tight consolidation above $72K.