Transcription
hello everybody Welcome to bitcoin not
crypto my name is Forest Stevens in
today's episode I'm going to be talking
about who micro strategy is not right
for the people that shouldn't hold micro
strategy and all of the reasons why it
might not be right for you before I do
that though I'm going to tell you about
Bitcoin well which is where I buy all of
my Bitcoin the reason I do that is they
have the lowest spreads for a
non-custodial exchange a non-custodial
exchange means they never hold your
Bitcoin for you so you eliminate
third-party risk you send them money
they send you Bitcoin directly to your
Hardware wallet they also have this
awesome bonus reward system where you
can get free Bitcoin in fact there's a
lightning address popping up right now
if you're the first person to scan this
you'll get some free Bitcoin and if you
use my code which is in the description
you can also get some free Bitcoin they
have non kyc options available for some
people and all around they are just a
great trustworthy source of getting
Bitcoin so micro strategy has had an
unbelievable year it's up just an insane
percentage since the beginning of the
year however in the last little while it
has um been in a bit of a downtrend and
there's a few different reasons for that
I would say one of them is just a
cooling off phase after a just
Monumental runup there's also been some
short selling against it as it's gotten
attention in the media and there's also
of course been the ATM that uh Michael
sailor has been issuing new shares into
the market so creating sell pressure
there which has done a lot to keep the
price from continuing to run up now it's
very natural in uh stocks and in the
market and basically in everything for
there to be uh a cool off phase which
means that stocks basically cannot run
just non-stop upwards because there
eventually hits a level of Sellers and
they're eventually runs out a uh the the
buyers that are in that price range so
it's just inevitable because um market
cap and price is is made on the margin
this is that means that there needs to
be buyers and sellers and when the the
amount of buyer and sellers uh go down
right people exiting the market not not
as in selling their position but not
becoming buyers or not becoming sellers
When there's less of that and then
there's an activity that increases the
amount of buyers or increases the amount
of sellers it can move really sharply
and really quickly when there's low
liquidity within the market where
there's not a lot of activity so we've
seen volume going down a little bit
we've seen price staying stagnant and
cooling off to the downwards we're we've
actually seen a massive Spike up again
here a nice little bounce of 10% in the
day but all of this kind of shows that
this is an extremely volatile stock
right I think people should understand
Bitcoin they should hold Bitcoin they
should be Believers in the long-term
vision of Bitcoin as a protocol as a
base layer money for the rest of the
globe and only then should you actually
look at micro strategy now micro
strategy you should think about in a way
of them having a base layer amount of
Bitcoin and you buy in at a multiple on
that base and over time because of what
they are they can acquire more Bitcoin
and that'll increase your Bitcoin per
share we could Implement a strategy of
leveraging ourselves to acquire Bitcoin
which is one of the strategies that M
that micro strategy does right however
we're not going to get basically 0%
interest rate and a very high conversion
price so very cheap debt we're not going
to be able to get that as an individual
so by buying micro strategy by believing
in the underlying Bitcoin and by
realizing that they can get very cheap
debt because of the structure uh and the
company and the volatility of the stock
that that is what you're benefiting from
you are getting uh the ability to
leverage Bitcoin at a very at very good
rates there's a lot else going for it
it's it's it's a stock as opposed to an
ETF and a fund there's certain Capital
allocators around the world that cannot
buy us ETFs but could buy us stock so
they're buying actual shares of micro
strategy there's captive capital in
different uh areas convertible bond
market for one corporate bond market for
another that can tap in and fund micro
strategy buying more Bitcoin and
increasing that Bitcoin under underneath
so you have to understand that it's a
lot different and it should trade at a
premium based on those things right
there's the passive funds and the
ability for micro strategy to get into
ETFs Market weighted ETFs they just got
into the QQQ which means a huge amount
of inflows and it means passive inflows
it means rebalancing of them needing to
buy more shares to keep their weight in
the
QQQ that should allocate and create a
huge PR premium on micro strategy just
off of its net asset value I'm
reiterating all this I've said this a
lot in my other videos but I'm
reiterating this to show a little bit of
a snapshot of what micro strategy is and
to show the value proposition of micro
strategy and to paint the picture of why
somebody would want to own this now the
reason you wouldn't want to own this is
back to that original point that I
brought up there's been a huge downtrend
a huge cooling off period and it's it's
um it's it's hard to hold something um I
guess that is going down right I think a
lot of people are emotional you know
money and emotion those two things tie
together uh very easily so you see your
net worth going down if you're fully
allocated to something like micro
strategy it's it's a leveraged play it's
a highly volatile play on bitcoin so
Bitcoin already is too volatile for a
lot of um asset allocators and micros
strategy is twice the ball of that right
so you have to kind of understand that
you can you can understand the whole
vision and value of micro strategy and
say hey that's really good that sounds
awesome I'm going to buy some of that
because I believe in all that but if you
also don't understand how it moves which
is extremely volatile then you're going
to get scared out of that position and
you're going to sell for a loss I think
a lot of people right now that have
gotten into micro strategy after this
huge Monument Monumental run the news
everybody talking about this stock the
reason everybody's talking about it is
because of that Monumental run and when
people see that they think okay well I
want to get leveraged to the tits right
I want to buy short-dated call options
that are out of the money you know the
tail end I want to buy mstx I want to
buy mstu which are prone to nav erosion
which leverage you 2x of something
already twice as volatile as Bitcoin so
right you you you know you're timesing
the volatility every time you go into
these leveraged plays of an already kind
of leveraged play of something
incredibly volatile if you can't handle
the volatility of Bitcoin if you can't
handle the volatility of micro strategy
you will not be able to handle the
volatility of mstx mstu and options on
micro strategy so you need to understand
that um you need to figure out your risk
tolerance you need to figure out your
ability to handle um
volatility you need to allo you need to
understand risk management um like you
know position size right if if you put
if you think micro strategy is a sure
thing even if you don't buy something
like so options right they create
leverage but they have they have um
realized lost loss risks in them if you
buy a call option you're putting that
money uh up front buying that premium
and if that doesn't if you don't sell it
before the expiration if you let it
expire and it doesn't expire in the
money uh You've Lost That Money that
money's gone right that money was was
given to somebody else to for that
contract of that option and it's gone
you can also open yourself up to even
bigger risks with different types of
options but this is just a long uh call
option is what I'm describing here so
you might think okay well I'm not going
to do that because I don't know
understand options or something like
that but I want I want the outsized
gains right I I don't just I'm not okay
with just the crazy gains that micro
strategy has I'm going to buy a fund
that's managed for me that gives me uh
basically two two times leverage and I'm
not opening myself up to realize losses
unless I sell the thing right well the
thing is is there's a lot of internal
going on in those funds and yes you it's
unlikely that they'll go to zero but
what they'll do if they continue to go
down right if micro strategy Trad
sideways for a long time if it trades
down for an extended period of time
these funds are just going to get beaten
to crap and they will do reverse stock
splits to keep the keep from going to
zero right they never have to go to zero
but their nav will get eroded their
their net asset value because they're
buying they're buying options they're
doing credit swaps they're doing all
this stuff and it just ends up that
micro strategy the underlying goes down
right these things are going to get
beaten basically to zero they these
stocks could get beaten to
99.9% down right and that's for all
intents and purposes that's that's zero
right that's that has opened yourself up
to unrealized or sorry to realized
losses right I mean yes you still have
to sell it but on paper you're just down
like crazy I'm not saying this is going
to happen and in fact I am extremely
bullish on micro strategy I think they
have an opportunity to increase the
share price like crazy over the long
term and that's what for me needs to be
understood and and and is something that
I personally understand that this is a
long-term play I do not leverage myself
in the short term I don't play with mstx
mstu because I don't think that I am a
better Trader that I understand some
sort of alpha that I have some sort of
edge over the market in the daytoday and
that's when those tools are basically
supposed to be used they they're
supposed to be day um you know they
rebalance every single day they're
designed to be sort of a very
shortterm
um uh tool to play a momentum trade and
that for me is not what I'm interested
in doing I have a long-term play I have
a little bit of Leverage on that because
I understand options and I've taken an
options position I also hold shares and
I hold it for the long term I'm lucky
enough to have boughten I my cost basis
is at a level where this downturn that
everyone's losing their minds over over
the past couple weeks is still doesn't
have me anywhere close to being negative
on my Holdings so I'm looking at this
and thinking I'm fine and the reason I'm
fine is because I'm solvent and the
reason I'm solvent is because of my lack
of Leverage people think okay mstx it's
two times I understand that's leverage
but they don't understand what Leverage
really does leverage puts you in a
situation where you can lose more than
you have and it seems like it doesn't
really that isn't really the case when
you're just buying an ETF share of
something but you're still you're
opening yourself up to a lot of risk of
loss even with something like mstx and
mstu in my opinion now is there a future
where someone like me would trade or
would hold for a period of time
something like mstx mstu well I've
already told you I hold a leveraged
position I have options they're
long-dated they're
554 days to expiration something like
that the reason I'm okay holding that is
because I've bought I bought those at a
time where I'm still I'm up
124%
134% on them I've been up 300% on these
options um so I'm down a lot and I'm
fine right obviously because I'm still
up and even if I went negative on
them uh that I believe would only happen
in the short term because right now
micro strategy is in this Mass
accumulation phase and in that is the
destruction of share price appreciation
in the short term but that's why these
are leaps these are long-dated options
that I hold they are very long data 546
days whatever I said something around
that anyway and uh that's because I
looked at all the catalysts right you
know a lot of these catalysts end up
being kind of nothing Burgers but all
together they end up pushing the price
up the valuation up the market cap up
right we can see fomc meeting this week
was supposed to be a positive Catalyst
you know a rate cut and I think in the
long term a rate cut is a positive
Catalyst because um micro strategy can
get more favorable convertible Bond
offerings but they're not going to do
that immediately they haven't done it
immediately and this is a long-term
thing right QQQ they've gotten included
we even after they got included with the
the news of it the share price still
slid I mean it's up today maybe because
a lot of these funds need to fully
allocate for that that QQQ date that's
coming up I believe on Monday so it's
like all of these things play out and
they take time to play out and that's
why trading on the short term on
something like this is extremely
dangerous and I think that you just need
to understand who you are what your
goals are and yes of course you want to
just leverage like crazy because the
upside you know the asymmetrical Trade
It just sounds so good to be true but if
you have a short-dated horizon view of
this you will get wrecked in the short
term because of the volatility because
the unexpected nature of the markets in
the long term all of that Smooths out
right there's that saying when in doubt
zoom out that's the same thing right
zooming out backwards buying a leap
instead of a short to expiration option
or buying shares instead of um a 2X
leverage that in fact allows you to zoom
out into the future because it it puts
less risk and less um necessity for you
to ever sell those things or to have
them expire worthless or whatnot right
so it allows you to zoom out into the
future so when in doubt zoom out and
when in doubt stay solvent stay safe
we're dealing with something already
volatile enough with already enough
upside for the vast majority of people
it does not make sense to trade this
thing it does not make sense to leverage
against this thing there's already
enough leverage in the system let's stop
with the degeneracy let's just focus on
building slow and steady above market
returns on something fantastic with the
underlying being Bitcoin which of course
has an adoption phase is going to be the
protocol of base layer money and has the
potential to change everybody's Lives
who are early adopters to it so if you
want to get yourself if you want to
remove yourself even a little bit more
from the risk of micro strategy if you
want to get what they are holding which
has less volatility has amazing gains
you know 60% uh compound annual growth
rate something like that right check out
Bitcoin well you know they have the
lowest spreads for a non-custodial
exchange which means that you pay less
for more SATs you know you get to stack
more with less money check them out Link
in the description and I appreciate you
guys if if you feel like I've missed
something here if if uh I'm off at all
um comment your questions and concerns
in the comment section and we'll see you
on the next one