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is there any kind or margin call trigger on their loans? something that would force them to liquidate? I think the way its been sold is that the money is locked in until 2028, which will probably pay off by then. 

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13 minutes ago, jiltedjen said:

is there any kind or margin call trigger on their loans? something that would force them to liquidate? I think the way its been sold is that the money is locked in until 2028, which will probably pay off by then. 

Dont believe so - think they've issued stock and bonds rather than buying on margin.

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29 minutes ago, dugsbody said:

Selling debt to buy assets you could not have otherwise bought is leverage. They are leveraged. If bitcoin goes against them, the leverage will be the killer. If it goes for them, they make outsized gains. That is what leverage does.

Bitcoin could go to $100 , until just before the notes expire, then jump to $100k+, and MSTR would be fine, only then is the debt repaid. All MSTR need do is service the 6% interest and repay the loan on maturity when it expires, which is 2028, 2 halvings away. 

Absolutely no way BTC wont be $500k after the 2028 halving and Saylor knows this.  So when these senior notes expire, he will get fresh loans on a much more valuable BTC stash and use that money to clear the old loans. Rinse and repeat forever, except each time the loans as a % of BTC holds get smaller and smaller. 

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41 minutes ago, jiltedjen said:

is there any kind or margin call trigger on their loans? something that would force them to liquidate? I think the way its been sold is that the money is locked in until 2028, which will probably pay off by then. 

Rising IRs

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30 minutes ago, warpig said:

Rising IRs

Wont matter, they set the IR of the notes @ 6%.  Makes no difference if IR are -5% or 25% , they took the deal and are stuck with a 6% return until the notes mature and they get their capital back. 

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13 minutes ago, jiltedjen said:

So if/when their holding are underwater there isn’t really any push to liquidate? 

what about people wanting out of their fund? 

Saylor is way way smarter than this, dont you think he covered all these bases?  The IR of the deal is fixed, the length for maturity is fixed, if you bought it, you are stuck with it until it matures. I guess holders have the right to sell their position to another entity, but that is their loss if Bitcoin MSTR bought is worth less than the monies loaned to MSTR.  They took the risk, and 6% is a hefty premium to take the risk, and they couldn't give MSTR their money fast enough.  

All that matters is the price of Bitcoin when all these Senior and convertible notes expire 1-2 halvings away.  Saylor has basically bet 6% p/a for 6-7 years that Bitcoin will be worth much much more then than it was when he bought it. 

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30 minutes ago, jiltedjen said:

So if/when their holding are underwater there isn’t really any push to liquidate? 

what about people wanting out of their fund? 

Read the offer notes. 

The notes and the related guarantees are secured, on a senior secured basis with MicroStrategy’s existing and future senior indebtedness, by security interests on substantially all of MicroStrategy’s and the guarantors’ assets, including any bitcoins or other digital assets acquired on or after the closing of the offering, "but excluding MicroStrategy’s existing bitcoins as well as bitcoins and digital assets acquired with the proceeds from existing bitcoins. MicroStrategy’s existing approximately 92,079 bitcoins are being held by a newly formed subsidiary, MacroStrategy LLC."

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25 minutes ago, markyh said:

Wont matter, they set the IR of the notes @ 6%.  Makes no difference if IR are -5% or 25% , they took the deal and are stuck with a 6% return until the notes mature and they get their capital back. 

👍

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29 minutes ago, warpig said:

👍

It's weird anyone wanted to buy them... loads of downside not a lot of upside.

The potential issue MS has is if these end up underwater and they need to raise any further finance - I've no idea what their cashflow is like.

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7 minutes ago, Salty1 said:

It's weird anyone wanted to buy them... loads of downside not a lot of upside.

The potential issue MS has is if these end up underwater and they need to raise any further finance - I've no idea what their cashflow is like.

Pretty sure their free cashflow can easily pay the 0.75% (2025 matures) and 6.125% interest (2028 matures) interest to give BTC price to recover, that's 1 whole halving + bull run following year and 2 fulling halvings away. 

If BTC isn't above $100k by either of these dates everyone involved who believes would be amazed. 

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1 minute ago, Salty1 said:

It's weird anyone wanted to buy them... loads of downside not a lot of upside.

The potential issue MS has is if these end up underwater and they need to raise any further finance - I've no idea what their cashflow is like.

6% returns are attractive in a low IR environment...

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13 hours ago, goldbug9999 said:

It makes no odds what any regulatory body says, bitcoin is a bearer asset and so therefore already implicitly requires a 100% capital ratio. Anyway welcome to the thread and way to go ploughing in with some complete shite as an opener, but hey you can only get better right.

“Welcome to the thread…” how quaint. I was on HousePriceCrash as one of the first members, and was on here over 8 years before this thread even started. 
 

That was 3 years before you joined. 
 

Sorry, didn’t realise you “owned” the thread, chap. 

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On 22/06/2021 at 07:03, Peter Hun said:

He didn't design bitcoin.

Look at Central Bank Digital  Currency,  almost the opposite of Bitcoin.

It goes without saying that you are deluded ig you think that the world will give up control of its economies.

 

On 22/06/2021 at 13:31, Huggy said:

A whole coin added if it reaches £15k.

 

Very tempting!

 

16 hours ago, goldbug9999 said:

The ban is ineffective, you can just use etoro which is an FCA regulated investment platform, you can fund it using paypal so the bank has no way of stopping you getting the money there. Plus the fact that paypal are going to allow you buy BTC directly in the UK at some point anyway. At the end of the day what the UK dinosaur institutions choose to do is irrelevant.

Good to know.

 

6 hours ago, Salty1 said:

It's weird anyone wanted to buy them... loads of downside not a lot of upside.

The potential issue MS has is if these end up underwater and they need to raise any further finance - I've no idea what their cashflow is like.

MicroStratey had a $500m ice cube i.e. cash in his treasury which forced him to act after March 2020.  Listen to him, he always refers to the cost to capital of 20%+ so he had to act.  His personal wealth, before he also bought BTC was $500m.   The company's cashflow I think is $50m.  Somehow, I don't think he will screw up given how he has set up his deals and his own fortune, unless some unexpected event crashes BTC and it never recovers.  V unlikely.

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1 hour ago, jiltedjen said:

Whens the Paypal announcement? i thought it was supposed to be like 2 months ago?

Didnt seem to cause much of an issue in the US in the roll-out im not sure why its taking so long in the UK

PayPal have been expanding their US rollout from simply buying and selling Bitcoin to include paying for goods in crypto and allowing transfers to third party wallets. Give them a chance FFS 🤦‍♂️ 

https://www.theverge.com/2021/3/30/22357246/paypal-buy-with-bitcoin-litecoin-ethereum-crypto-checkout
 

https://www.independent.co.uk/life-style/gadgets-and-tech/bitcoin-paypal-crypto-wallet-ethereum-b1854845.html

 

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On 23/06/2021 at 07:24, mbga9pgf said:

So, in my mind, what has changed… BIS requiring 100% capital requirements against Bitcoin makes it difficult for any bank to use it as a tradeable commodity. For every 10 dollars their customers trade in Bitcoin on margin, they could have traded 100 dollars in most other assets. 
 

since the BIS announcement of 1 for 1 BTC capital requirements, the price has tanked.

The crypto market goes through bear and bull markets. Doesn't need to be tied to any concrete reason.

Besides, the paper market in gold has been used to manipulate the price of physical for decades. If anything, disallowing that kind of game increases Bitcoin's value as a store of value.

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59 minutes ago, Locke said:

The crypto market goes through bear and bull markets. Doesn't need to be tied to any concrete reason.

Besides, the paper market in gold has been used to manipulate the price of physical for decades. If anything, disallowing that kind of game increases Bitcoin's value as a store of value.

Good point. 👆

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