They go into debt for $400 million and bet it all on Bitcoin – The crazy bet of a Wall Street legend

Yes, I agree to receive emails according to your privacy policy.
Buy BTC with State Aid – After buying $50 million worth of Bitcoin, MicroStrategy this week revealed its upcoming crypto project. The firm will issue $400 million in convertible bonds. The purpose of this loan? To buy as much Bitcoin as possible.

MicroStrategy is using the stimulus pack to buy Bitcoins.
MicroStrategy’s $400 million loan will be issued in bonds convertible into shares until 2025. The offering will be made to accredited investors, eliminating the need for SEC registration.

„The securities will be senior unsecured bonds and will bear interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2021. The Bonds will mature on December 15, 2025, unless earlier redeemed, repaid or converted in accordance with their terms. »

MicroStrategy Press Release
In short, MicroStrategy will borrow in dollars from institutional investors to buy Bitcoin. We know that the Fed is printing greenbacks to buy corporate bonds, but we also know that MicroStrategy is issuing bonds to buy Bitcoin. So one could smile at the rather quick shortcut of thinking that the Fed could indirectly print dollars to buy Bitcoin.

 

Obviously, this shortcut is crude, but it paints a picture quite close to reality. Michael Saylor understands the principle of helicopter money very well and is taking advantage of the stimulus package to accumulate Bitcoin.

„MicroStrategy intends to invest the net proceeds from the sale of the bonds in Bitcoins, in line with its cash reserve policy, pending the identification of working capital requirements and other corporate objectives. »

MicroStrategy Press Release
At the current price, the $400 million would increase the company’s holdings by 20,833 BTC, bringing the total stock of the company to nearly 62,000 BTC.

Such an influx of cash into the exchanges would clearly be counterproductive, as it would put strong pressure on the price, causing it to fall. This purchase will therefore probably be made over-the-counter with one or more players, whose Bitcoin bags are well filled… as was the case for the first BTC purchases made by MicroStrategy, in connection with Coinbase.