The weekend signal from Michael Saylor, executive chairman of Strategy (Nasdaq: MSTR), has kept the market on edge.
In recent months, his typical weekend “green dots” signals have been followed by a BTC buying announcement the next day. But the newest message has left analysts guessing.
Source:
The green dot he was referring to is the company’s average cost basis for its inventory of 649,000 BTC, which currently stands at $74.4K per BTC. But what does “adding” it actually mean?
Deciphering Saylor’s next move
The uncertainty surrounding Saylor’s move was exacerbated by a recent statement from Strategy CEO Phong Le.
Le said the company’s BTC can only be sold if the MSTR falls below its mNAV (market-to-net-asset-value) and there are no additional financing options.
As the mNAV has fallen below 1 at the time of writing, some, such as Eli Ben-Sasson, CEO of Starknet, have warned that strategy would be dumping BTC.
According to Sasson, this meant they could sell BTC and buy back MSTR to improve mNAV and market position. Another analyst, Joe Burnett, echoed this line of thought and added,
“This means that it would yield more (BTC Yield) to issue digital credit and buy back MSTR, rather than more BTC.”
Source:
For Peter Schiff, however, he could not miss the opportunity to thwart Saylor’s move. He said,
“You will continue to average your Bitcoin costs and destroy even more shareholder value.”
He claimed that the MSTR model is a Ponzi scheme and claimed that it does not generate any “income.” But Jeff Walton, risk officer at Strive, stung holes in Schiff’s framework, drawing parallels with insurance business models.
Source:
What’s next for MSTR?
That said, another credit analyst noted that MSTR was in a difficult position and that selling BTC would undermine their hold thesis. Moreover, such a move would deepen the route in the BTC market.
However, Michael Kao, a hedge fund manager, projected that Strategy would not sell its BTC yet, because its liabilities were still manageable.
Besides the credit crunch and MSTR falling below 1, the company is still at risk of getting into trouble ruled out from the MSCI index in mid-January.
MSTR’s stock value has fallen 60%, from $457 to $177, following a 30% drop in BTC below $90,000. It remains to be seen how Saylor will handle the MSCI index revision in January and the potential impact on BTC.
Final thoughts
- Analysts had a different interpretation of Saylor’s latest ‘green dot’ signal and its potential impact on BTC.
- The MSCI index revision in mid-January remains an important event to watch for MSTR and BTC.