MicroStrategy Bitcoin Strategy dey face 'Spiral of Doom'
MicroStrategy don add 430 BTC on August 17, mek dem hold 629,376 BTC (wey worth $46.15 billion) at average buy price of $73,320. Di company dey link Bitcoin purchasing wit dia market net asset value (mNAV): dem dey issue new shares aggressively when e pass 4× mNAV, selectively between 2.5×–4×, den dey sell stock to cover debt when e under 2.5× mNAV. If di ratio fall under 1×, MicroStrategy fit borrow money to repurchase shares. EasyA co-founder Dom Kwok dey warn say dis model fit bring “spiral of doom”: repeated share issuance go dilute equity and reduce stock price, we fit trigger more dilution cycles. Even though MicroStrategy get di biggest corporate Bitcoin reserve, analysts dey alert say di structural link between share issuance and Bitcoin buying fit quicken sell-offs and increase market shakiness.
Bearish
MicroStrategy plan na tie Bitcoin buying with equity issuance, e dey create feedback loop: share dilution to fund BTC purchase dey press MSTR stock down, dat one go trigger more share issuing. Historically, companies wey dey issue shares many times—like for equity raises for 2020—dem valuation drop sharply and investor confidence shake. Short term, traders fit sell MSTR and reduce Bitcoin exposure because of dilution fear, e dey add downward pressure. Long term, constant share issue fit risk corporate solvency, discourage institutional Bitcoin buyers, and spoil market stability. Overall, this structure-driven cycle dey suggest bearish outlook for both MicroStrategy and Bitcoin market.