According to DiscusFish, MSTR raises funds through the sale of convertible bonds and ATM (at-the-market) offerings, which allow for the issuance of new shares at any time in the market. These funds are primarily used to purchase more Bitcoin, achieving the goal of “coin hoarding.” This strategy not only makes MSTR one of the largest corporate holders of Bitcoin but also attracts professional institutions (such as hedge funds, bond investors, and options traders) to participate. These institutions utilize the high volatility of MSTR stock for volatility arbitrage, capturing short-term profits.
However, the risks of this strategy are mainly borne by common shareholders. The extreme volatility of MSTR stock—partly due to the fluctuations in Bitcoin prices and partly due to the “crash” effect that may result from ATM offerings (i.e., new stock issuance pressuring the stock price down)—places retail investors under pressure from short-term price declines. Nevertheless, common shareholders may also gain “BTC Yield” through long-term holding, which refers to the increase in the amount of Bitcoin per share, allowing them to exchange short-term volatility for the opportunity to hold more Bitcoin in the long run.
Meanwhile, long-term Bitcoin investors (BTC holders) benefit from the continuous inflow of funds into the market and the rising price of Bitcoin. MSTR’s strategy indirectly promotes the value growth of Bitcoin, as its large-scale purchases increase market demand.
The tweet from Shenfish sparked broad discussion. Some community members believe that those who do not invest in Bitcoin or MSTR stock may become “losers” for missing out on the market’s upward opportunities. However, others point out that common shareholders may actually bear losses due to high volatility and the pressure from the issuance, while other market participants engaging in volatility arbitrage by professional institutions may also become “invisible losers.”
Additionally, some analysts have noted that MSTR’s “infinite funding” strategy appears particularly successful when Bitcoin prices rise, but if Bitcoin prices fall or market sentiment shifts, common shareholders and convertible bondholders may face greater risks. This phenomenon highlights the intersection of cryptocurrency and traditional financial markets: MSTR’s strategy creates profits for some participants while potentially imposing risks or opportunity costs on others. As the Bitcoin market continues to develop, the sustainability of MSTR’s model and its range of impacts remain to be observed further by the market.
