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If there is anything staggering about the capital market in 2024, it is that – everyone wants to be the next Michael Saylor, but the vast majority of people die on the way.
In the past few months, a group of so-called “Bitcoin Treasury Companies” have emerged in the U.S. stock market.They are trying to copy the MicroStrategy playbook: issuing bonds, buying coins, and raising stock prices.The results were disastrous.
Veteran investor Andy Edstrom bluntly described this phenomenon in a recent in-depth conversation as“Dumpster Fire”
Why is the same strategy considered a myth when used by MicroStrategy, but a joke when used by others?At a time when the AI narrative is crushing everything like a freight train, is Bitcoin still the best asset haven?
Today, we cut through the noise and talk about the underlying logic behind this.
Chapter 1: The essence of MicroStrategy is not “buying coins”
This is a counter-intuitive realization: If you think Michael Saylor is just borrowing money like crazy to buy Bitcoin, you may only understand the first layer.
Andy Edstrom put forward an extremely sharp psychological model:MicroStrategy is essentially earning the spread by issuing a “USD stablecoin.”
Let’s dismantle this mechanism: Behind the familiar USDT (Tether) is the issuance of U.S. dollar tokens using U.S. Treasury bonds as collateral.What MicroStrategy does is essentially“Use Bitcoin as collateral to issue income-generating USD tokens”.
The “USD token” here corresponds in reality to theConvertible DebtandPreferred Stock.
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Mechanism:It borrows low-cost dollars from the market (via debt/preferred equity) and then converts these funds into Bitcoin.
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Safety pad:In order to ensure the security of this system, there must be an extremely high “over-collateralization rate”.Andy noted that given Bitcoin’s volatility (it can drop 70-80% in a year), MicroStrategy maintains about5:1 overcollateralization ratio
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That’s why it’s the only successful player currently.It has a huge stockpile of Bitcoin (worth about $56 billion as of the time of the podcast recording
This is textbook financial engineering.
On the other hand, those imitators called “DATs” (digital asset reserve companies) are often cobbled together by teams that have never managed a public company. Their core business has no cash flow, and even basic SEC financial reports cannot be submitted on time.
“It’s a binary world: MicroStrategy is in a league of its own, and the other imitators, for the most part, are a complete disaster.”
Chapter 2: The fog of valuation – why do we have to pay for a premium?
This leads to the biggest debate in the investment circle: If I want to hold Bitcoin, why don’t I just buy the spot instead of MSTR, which has a serious premium?
A core indicator is involved here:MNAV (Market Net Asset Value, market net asset value).
Many enthusiasts try to brainwash the market by saying that such companies deserve a 2x or even 15x MNAV premium.Andy Edstrom, who has a background in economics, scoffs.he reviewedClosed-End Fundscentury-old historical data
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Normal:Closed-end funds are usuallyDiscountTransaction status (e.g. 10%-20% discount), only in rare cases will there be a small premium.
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Exceptions:Only an extremely well-managed holding company like Berkshire Hathaway, or a bank with 10x leverage, can sustain a book value premium of around 2x
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The conclusion is cruel:Unless a company can prove that it can outperform Bitcoin itself through active management (such as low-interest financing, cashing out at high prices and covering at low prices), it willshouldn’tEnjoy high premiums in the long term.
For MSTR, the market is willing to pay a premium because it does increase the currency content per share through capital operations.But for other small companies that do not have any positive cash flow and simply hoard Bitcoin (or even Ethereum, BNB), paying a premium is paying an “IQ tax”
Chapter 3: The Elephant in the Room – AI Sucks Bitcoin’s Liquidity
We must face an embarrassing reality: over the past year, Bitcoin’s price trend has appeared “boring” and weak relative to AI technology stocks.
Why?Because AI narratives are so sexy.
Preston Pysh made a very keen observation: for high-net-worth people with a lot of money, understanding Bitcoin requires a very high cognitive threshold (cryptography, monetary history, geopolitics)
In contrast, AI is“Instant gratification”of.Anyone turns on the computer and enters a question, and ChatGPT or Gemini will instantly give a stunning answer.Investors immediately understand: “Oh my gosh, this thing is going to change the world, and I want to buy the company that makes it.”
This explains the flow of money.Take Google as an example. Although it was ridiculed in the early days, its Gemini model iterated very quickly and is now competing with OpenAI.
“This thing (AI and robots) is like a high-speed freight train. When you see the scale of the factory Elon plans, you will feel crazy. But when it actually comes to fruition, it will be an absolute market leader.”
But does this mean Bitcoin is dead?Absolutely not.
Andy Edstrom sticks to his 2019 judgment: Bitcoin is still expected to reach 10% in the next 10 years (that is, by 2029)US$400,000/piece(Based on $8 trillion network value)
But the investment logic has changed.In 2019, Bitcoin was “the best risk-adjusted investment of a generation.”Today in 2025, although it still has 5 times the room for growth, it faces strong competition from the explosion of AI productivity.
The world is dividing into two main lines:
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Unlimited fiat currency printing(driven by government debt and social disruption brought about by AI).
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Extreme productivity deflation(Powered by AI and bots).
Bitcoin is a shield against the first, while tech giants are a spear to seize the second.
Conclusion: Finding certainty amidst the noise
When the tide recedes, we find that the so-called “Bitcoin concept stocks” are mostly swimming naked, while the real giants (such as MSTR) are evolving into a new type of financial institution.
For ordinary investors, the current market is full of noise.The following are 3 action guidelines based on this in-depth conversation:
1. Be wary of the leverage trap of “pseudo reserve companies”Don’t be fooled by marketing jargon about “the next MicroStrategy.”If a company does not have strong cash flow from its main business and does not have enough Bitcoin for over-collateralization, its high premium will be a castle in the air.If you are bullish on Bitcoin, buying Bitcoin itself (or a spot ETF) directly is always the lowest risk option
2. Embrace the underlying logic of energy and computing powerThe end of AI is energy.With the explosion of data centers and robots, power demand will grow exponentially.Solar energy can’t fill all the gaps;Natural Gasand other baseload energy sources may be significantly undervalued by the market
3. Bitcoin is “insurance”, not a “lottery”If you buy Bitcoin just because you want to “get rich”, you may be disappointed, or be lured away by the gains in AI.The ultimate reason to hold Bitcoin remains:UncensorableandCoping with the collapse of fiat currencies.When the government has to turn on the nuclear-powered money printing press in response to the wave of unemployment caused by AI
In this era of uncertainty,Own private key (Self-custody)Still the last line of defense.
“Everything takes longer in Bitcoin than we think it will.”(Everything about Bitcoin is moving slower than we expected, but that doesn’t mean it won’t happen.)
