Bitcoin vs. MicroStrategy: Which One Should You Buy?
Crypto industry veterans and investors are currently debating whether Bitcoin (BTC) or MicroStrategy (MSTR) is a better investment option. Both assets have shown impressive performance in recent weeks.
Bitcoin has experienced a 54% rally since the beginning of the year, driven by the high demand for newly launched Bitcoin ETFs. These ETFs have seen their shares appreciate at the same rate as the underlying coin. On the other hand, MicroStrategy, which is owned by Bitcoin billionaire Michael Saylor, has seen a staggering 155% increase during the same period.
The World’s Largest Corporate Holder of Bitcoin
MicroStrategy holds the title of being the world’s largest corporate holder of Bitcoin. The company’s balance sheet currently consists of 205,000 BTC, which is nearly 1% of the total supply of Bitcoin that will ever exist.
Many individuals, including Michael Saylor himself, compare MicroStrategy to a Bitcoin spot ETF but with the advantage of having no management fee. In addition to this advantage, there are several other factors that make MicroStrategy an attractive investment:
- The company can utilize cheap long-term debt to acquire more BTC, resulting in increased valuation.
- MSTR acts as a leveraged BTC long due to its leverage buy on cheap financing.
- The debt acquired by MicroStrategy is significantly cheaper than what is accessible to regular individuals. The interest rates on their latest convertible note sales are as low as 0.6% and 0.8%, while traditional lending rates exceed 5% and crypto markets lend stablecoins at over 10%.
According to Bitcoin analyst Willy Woo, these advantages effectively boost shareholders’ “BTC per share” metric, which remains relatively flat in standard Bitcoin ETFs offered by BlackRock and Grayscale.
MicroStrategy also has other avenues for acquiring more BTC, such as selling bonds or issuing more company shares. The latter method not only reduces the company’s debt ratio but also increases shareholders’ BTC per share.
Bitcoin OG Adam Back believes that MicroStrategy can double its BTC holdings and more between now and hyperbitcoinization. He suggests that the company has the potential to further expand its Bitcoin portfolio through various means.
Advantages of Owning Real Bitcoin
While MicroStrategy offers unique advantages as a Bitcoin investment option, it is important to note that it still carries corporate risk alongside actual Bitcoin. There is a possibility that management may change its Bitcoin strategy, and the valuation of the company is also influenced by its pre-existing software business, which may not guarantee profitability in the future.
Furthermore, critics argue that Michael Saylor’s decision to sell his shares in MicroStrategy to purchase more BTC indicates a lack of confidence in his own company compared to Bitcoin itself. Some believe that if Saylor truly believed in MicroStrategy as a good investment, he would be conducting stock buybacks instead of selling shares to acquire more Bitcoin.
Hot Take: Which One Should You Choose?
When deciding between investing in Bitcoin or MicroStrategy, there are several factors to consider:
- If you want direct exposure to Bitcoin without any management fees, MicroStrategy may be an attractive option.
- If you believe in MicroStrategy’s ability to utilize cheap debt and increase their BTC holdings over time, it could be a strategic choice.
- On the other hand, if you prefer owning actual Bitcoin without any corporate risks or uncertainties, investing directly in BTC might be the better choice.
Ultimately, the decision depends on your risk appetite, investment goals, and personal beliefs about the future of Bitcoin and MicroStrategy as investment options.
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