Transcription
Well, I think the bearishness on MSTR is because it's gone sideways for a year. People that maybe bought it, call it a year ago, they were hearing discussions about how it's outperformed Bitcoin, this and that, and so they buy it. Their actual analysis as to why they bought it was everybody's talking about this. It's outperformed Bitcoin. Michael Sailor goes on an interview. He sounds super smart. Therefore, that end of analysis, therefore, I'm going to buy MSTR.
Bitcoin went sideways. And what happened to MSTR during that period of time is it got more and more levered through that period of time. What happens when you're more levered against something that's uh it's a derivative of Bitcoin. So it's more levered and it's gone the underlying went sideways. What's going to happen to the derivative that's levered? It's going to move even more with more volatility and more vigor against the underlying.
Bitcoin keeps making headlines with massive accumulation. Tens of thousands of coins being bought at a time, yet the price often grinds sideways. To many, that looks like a contradiction. But this isn't a broken thesis. It's a matter of market structure. In a market now dominated by hedge funds and arbitrage desks, big orders don't always punch straight through to the chart. Instead, they can be absorbed, offset, or even faded through basis trades and derivatives hedges. The result is a strange paradox: record demand, lower volatility, and a chart that can look stubborn or even weak despite genuine large-scale buying. Analyst and podcaster Preston Pis has been clear on why this happens. In his view, the arrival of ETFs and Wall Street's fast money strategies has layered paper claims on top of real Bitcoin. These market neutral trades, long in one place, short in another, siphon out volatility while still letting institutions clip yield. That changes the rhythm of the market. Bitcoin's long-term trajectory can still move up and to the right, but the day-to-day fireworks that defined earlier cycles are often dampened. For investors, that means patience matters more than ever.
And this dynamic leads us directly into today's most controversial storyline, the rise of corporate Bitcoin treasury strategies. Companies like Micro Strategy are not only buying huge amounts of Bitcoin, but also broadcasting their intent, creating ripple effects across derivatives markets and institutional positioning. In this video, we'll break down how that plays out, why it matters for price action, and what investors can learn about navigating a derivatives-heavy Bitcoin market. If you value signal over noise, make sure to like and subscribe so you don't miss the next breakdown. Thanks for the support and enjoy the video.
I think uh at large I think you have uh now that the institutions are here they're doing very institutional like things which is turning bitcoin into a paper derivative on top of bitcoin and uh for all intents of purposes like I would say uh up until the ETF launch um it was very clear whether something was being built on top of bitcoin or it was some type of ICO token scam kind of thing off to the side. And so there was like this bifurcation. Either you're in this camp or you're in the the camp that's creating these clown coins and and uh trying to convince people that it's somehow going to be valuable someday. And now that you have the institutions showing up and they're they they are creating derivatives of Bitcoin. Um, there's a lot of people that are concerned as to, first of all, what's the impact of that long-term? Second of all, am I being scammed like all the other scams that preceded this uh this this wave that we're currently in? And um I think that at large like part of the c the Bitcoin culture is to be pretty much skeptical of everything and to question everything because pretty much everything we've been told, you know, up up till now has been kind of a lie in in the way that the economy works and how things work. So I think you have a a bit of a culture clash that's kind of coming to head there. Um, that's causing a lot of the sentiment and a lot of the frustration that you're seeing. And you know, uh if I have to speak candidly, I think I think it's healthy. I don't I don't necessarily see it as uh a bad thing. I think that a lot of it is healthy, but I would also caveat that with, you know, if we warp ourselves 10 years into the future, how do people see Bitcoin being used? Is it something that is pretty customary to have Bitcoin on a company's balance sheet, a publicly comp a publicly traded company's balance sheet? How do they want to own it? Do they own it through IBIT or do they actually own the coins? And for people who have kind of made Bitcoin what it is, that getting it to here, getting it to over a trillion dollars involved individuals for the most part self-custodying Bitcoin, holding on to the keys for dear life through 70 and 80% downturns and still not selling them because, you know, the the term we like to throw around is we're Bitcoin psychopaths. And part of that culture that brought it to where it is is looking at where this is all going and they're saying, "No, no, no, no. This is all moving in a bad direction." But and and again, I'm not trying to say that everything's good and dandy and fine and not to be concerned, but I think a lot of the ethos that got us to where we're at are being challenged. And I think they're going to continue to be challenged. And I think that it's going to move in a direction where a lot of people kind of use Bitcoin the way they want to use Bitcoin, especially institutions are going to use it very differently than individuals use it. And that's kind of difficult for people to that's a difficult pill for people to swallow and they don't like it.
Who's really on the sell side? What's putting that pressure on Bitcoin's price that's causing us to maybe have some headwinds on the way to 150 and 200, which people are still predicting for the end of this year?
Yeah. Um, I first of all, I don't know, but I definitely can feel the the frustration and the pain because like it just feels like every day there's another announcement of, oh, so and so company just bought 10,000 plus Bitcoin, the price was down on the day or whatever. But if I had if if I was going to guess what I think it is, I think that you have fast money Wall Street traders, Jane Street, uh to kind of name one actor, and there's many of them out there that like they're in the business of of sucking volatility out of the market and and really not having any exposure other than they're going long and short simultaneously and they're arbitrageing the difference. And what what that does, uh, if you're going to zoom out and kind of look like what does that do to a market that's going up, it's going to make that volatility continue to collapse as it's going up. So, you're going to see the waves very large at the beginning when they're entering the market and and conducting this this fast money trade. And um, as as it continues to progress along, the chart is up and to the right, but the the volatility is getting further and further dampened in that process. And so that's what I think we're seeing. Um, which so a person would be like, okay, so like what does that where does that take us, right? And where I think it takes you is this scenario where the spring is coiling and it kind of pops one way or the other. Um, the upward trend would suggest that it's going to pop higher. But, uh, you also have to understand that markets are highly dependent on liquidity. They're dependent on all these other external factors. So, I'm not like one of these people that's looking at a technical chart and saying the volatility is collapsing. It's going up and we're going to go to, you know, to the moon. I'm not saying that.
But but because I think the external factors are are way more important than people realize. The liquidity, the basic liquidity in the market is massive. When I'm looking at the liquidity metrics of just global equity is a great way I like to like just kind of view like I'll look at all the global equity markets and if they're all ripping that's telling me that that the markets are flush with liquidity fiat liquidity and right now that's that's what we're seeing like when I look at global equity markets all around all around the world they're all like bidding. So to me that's a healthy indicator that uh Bitcoin could go higher but it also is dependent on like whether that whatever the source of that is continues to persist and continues to be pumped into the market. So people just have to be careful like it's it's not a guarantee. None of this is a guarantee that it's going to continue to rip or like that compression is is signaling that we're going to 200k in in weeks. It's not it's to me it's not that. But um I think that's why we've maybe seen a little bit of what we we've seen which is this dampening of what we have historically seen in the price action which is at this part of the cycle if you want to even subscribe to this idea that the four-year cycle is valid. Um, you would have seen a very aggressive move kind of already taking place and and to be honest with you back um Christmas time frame I I would have guessed by now we would have been way higher than where we're at right now.
Institutions didn't just bring capital, they brought basis trades. As Preston Pish explains, fast money shops run long here and short there, harvest spreads and systematically sell optionality that compresses volatility even while the broader trend tracks global liquidity. So you can see constant 10,000 plus Bitcoin bought headlines with a price that barely budges. It's not bearish for Bitcoin. It's a reminder that flow meets hedging and hedging often wins the intraday tape.
This brings us to the next order of business, Bitcoin treasury companies and the risk to investors, particularly those who don't do their due diligence before diving in. Here's a blunt take from Nick O'Neal urging investors to dump Micro Strategy as a Ponzi. Guys, I had to take a break from my very busy weekend to make this video for all those Micro Strategy bag holders who are in my replies saying that I'm absolutely crazy. I've been receiving a flood of DMs from people who have been giving me inside information about not only their personal experiences working and interacting with Michael Sailor, but it seems like I have some tips on some really questionable stuff involved with their actual business. I am a thousand% convinced at this point in time that Micro Strategy is a complete and utter Ponzi scheme. You need to get out while you can. You should have ultimately just bought Bitcoin. It's way better. And at the end of the day, you're going to end up thanking me for that advice because it is a thousand% clear to me at this point in time that Micro Strategy is on the verge of complete and utter implosion. You're telling me that they're going to that like Michael Sailor is just going to go issue new assets and use the capital raised to fund all the dividends and all of the cash flow that he needs to pay all the obligations that he has to all these different assets from raising more capital. This is the most ridiculous thing that I've ever heard.
Why PH is not as critical of Sailor and Micro Strategy. He also has some pertinent concerns. Pish's view is that Micro Strategies playbook, large repeated Bitcoin purchases financed with convertible notes, perpetual preferreds, and occasional equity, turns the stock into a levered Bitcoin proxy. That torque cuts both ways. When Bitcoin is flat, leverage plus premiums to NAV can drag MSTR. When Bitcoin dips, it can overshoot to the downside. More important, PISH warns that telegraphed corporate buys create targets. Sophisticated counterparties can short futures ETFs, hedge converts, and lean on create redeem to fade those flows in real time. That can look and feel like price manipulation, even without illegal collusion. Because incentives and plumbing let pros absorb demand and press the tape short-term. None of this makes Micro Strategy or Bitcoin treasury strategies bad or anti-Bitcoin. It makes them high beta instruments inside a market where paper and hedges can dominate the tape.
Let's get back to the interview.
Well, I think the bearishness on MSTR is because it's gone sideways for a year, right? And so people are people that maybe bought it, call it a year ago, they were hearing discussions about how it's outperformed Bitcoin, this and that, and so they buy it. Their actual analysis as to why they bought it was everybody's talking about this. It's outperformed Bitcoin. Michael Sailor goes on an interview. He sounds super smart. Therefore, at end of analysis, therefore, I'm going to buy MSTR. And then it goes sideways. Bitcoin has gone up slightly. Not much. I mean, at the beginning of the year, it was 100,000 and now it's call it 11 what 14,000 or somewhere in that ballpark 113,000. And so, Bitcoin went sideways. And what happened to MSTR during that period of time is it got more and more levered through that period of time. And what happens when you're more levered against something that's uh it's a derivative of Bitcoin. So it's more levered and it's gone the underlying went sideways. What's going to happen to the derivative that's levered? It's going to move even more with more volatility and more vigor against the underlying. And um if it goes slightly sideways, maybe a little bit up, if it's a derivative and it's levered, it's it's probably going to go sideways and maybe even down just because of how leverage works. And so you have a lot of people that bought it and they haven't got the performance that they were expecting and they're mad and that's that's it. I think that's it. And you know what? If Bitcoin goes down, if if Bitcoin goes down, let's say Bitcoin goes down 10% more from here, like your expectation on a derivative that's levered to that should be that it would go down more than 10%, it should go down like 20%. Like you can't expect outside performance when the when the underlying goes up without having the same kind of dynamic when it goes down.
What do you think about the execution of these more recent corporate Bitcoin treasury companies? My broad overview would be buyer beware. Read read the prospectus.
Um, which a lot of people don't, right? A lot of people invest without going into these documents and actually digging through the filings and what they're what they're sharing with the SEC, how much people are getting compensated, what what are the, you know, covenant obligations. And I recommend you do.
And you know what the beauty is these days, Natalie, is you can use AI to help you out. Like back whenever I was doing a lot of like reading the prospectus of various companies like you nobody could just like summarize it for you like you couldn't go into AI and say hey tell me the top 10 risks that you're getting from reading this prospectus and I mean this thing will like literally like knock it out and like give you some really good feedback as to what those risks are. So, like people have tools at their fingertips to help them go through all of these filings and like I would encourage you to do so. There's there's a there's a lot of shenanigans happening. Uh and and I think it's important that like although I love covering this topic and like really kind of getting into all the the accounting and the mechanics of all of it because it's super intellectually stimulating to to cover. I do think that there's there's a lot of risk out there uh with respect to like the capacity to to actually execute and do something similar to like what uh strategyy's attempting to do. And I'm not even saying strategy's in the clear. Like there's risks there like of course. Okay.
So the Ben Graham quote from Security Analysis is that he he says if you're a preferred stock investor, you're pretty much getting the worst case of being a common shareholder. you're getting the worst part of that and from a fixed income side you're getting the worst part of that. And so he's in in the book he's kind of like you know preferred stock is is basically the crap stuck between common and debt investing.
Yeah. Why?
In but what what I would say well because uh okay so like the the great part of being a common shareholder is if the company makes a bunch of money you participate in the upside of that right? A preferred shareholder you don't. On the fixed income side be it like when that becomes really important that you hold uh uh debt is if the company's going to go bankrupt. And so his argument is is if the company's going bankrupt, you're probably not going to have anything left over for the preferred shareholder because the debt holders are basically taking it all that that's left over in the bankruptcy. So you're not getting the advantage of that and you're not getting the advantage of the upside and therefore it's the crap kind of stuck in the middle between the two securities. So, but yeah, if you anyway, uh, where I think the preferred stock is really interesting though right now in this moment of time and and I never would have thought about this and I don't think Ben Graham writes about this in Security Analysis either, is when a currency is kind of melting down, there's this really interesting use case that strategy has really tapped into. And I'm not even 100% convinced that this is even valid what I'm saying, but I find it an interesting dynamic that he's choosing to use preferred stock mostly because he never has to pay back the book value on it.
Right. So when you when you raise a convertible note, you have to pay all of that back. Whereas um you raise money with these preferreds and you're paying out the the dividends, right? But you're not actually paying that lump sum. You put it into Bitcoin and you're making a killing over the long run.
That's right. So like the the the easy math of like kind of describing this is like let's say you do a convertible bond like after five if assuming you can get five years uh for the duration on it. Like after that five years if you borrowed a billion you have to pay the billion back. And so whatever debasement happened against that fiat denominated billion uh you basically got five years of debasement against that that fiat denominated liability and then you have to pay it back.
Right. Right. So you got five years to like really take advantage of it. And so when you pay that back and especially if it's convertible like you're paying for it through the dilution of the common shareholder after that five year five-year period. But if you've got preferred stock and it's perpetual and you're not really ever paying that back, you can allow that debasement of the fiat that that all of that's denominated in continue to just like draw out. So like if you're dealing with a 10% dividend, you basically got like 10 years before like the face value has been returned to those uh the buyers of that preferred stock and you still don't owe back the face value or the the book value of it after those 10 years. You can just continue to.
Preston Pish's defense of Micro Strategy rests on one core idea. The company isn't just gambling on Bitcoin. It's leveraging the world's most secure monetary network as a corporate treasury strategy. He argues that the reflexivity critics point to debt issuance, share dilution, and Bitcoin purchases is no different than how corporations have historically used balance sheets to compound value. The key difference is that Micro Strategy's balance sheet is tied not to a depreciating currency, but to Bitcoin, an asset with mathematically enforced scarcity.
Still, not everyone sees it that way. Jacob King, CEO of Whalewire, recently posted, "Micro Strategy's entire business model in one chart. A reflexive loop that only works if BTC keeps rising. When this Ponzi loop inevitably implodes, it'll make FTX, Enron, and Maid Off look like ants." This perspective frames Micro Strategy as dangerously fragile, dependent on Bitcoin's price continuing upward, and at risk of catastrophic collapse if momentum fails. It's a stark warning and one that captures the skepticism many traditional analysts still have toward Bitcoin heavy corporate strategies.
On the other hand, Tom Lee sees the exact same strategy as transformative. Here's a clip from a recent interview. Michael Sailor is changing the reality of the stock market. And um the reason is is that he probably will end up being the largest potentially the largest company in the stock market. Okay? Especially if Bitcoin goes to a million. Yet he doesn't generate gap net income to justify it. He's based solely on the value of his balance sheet. And uh but that that's not new to history because when I graduated college, the biggest stock in the S&P a top five name was Exxon Mobile and it was top five for 28 years, 30 years, like an entire generation graduated, worked on Wall Street. A top five name was a company that was only valued on the value of its oil, not on its net income. So like Micro Strategy is like replacing Exxon in lore because you know for a whole generation people said Exxon is the biggest company but you don't value on earnings. Well Micro Strategy could be one of the biggest companies in the world and it's valued on it's Bitcoin.
Lee's argument highlights the mirror opposite view of Kings. Instead of a house of cards, Micro Strategy is positioned to be one of the greatest beneficiaries of the Bitcoin super cycle. Not because of traditional corporate earnings, but because it has effectively become a proxy for digital gold on Wall Street. So where does this leave us? Between the doomsday scenario of Jacob King and the mega bullish vision of Tom Lee, Pish's reasoning offers clarity. Micro Strategy is not a Ponzi scheme, nor is Bitcoin. The real Ponzi is the fiat system itself, endlessly inflated, debtridden, and backed only by political promises. What Sailor and Micro Strategy are doing is simply opting out, aligning with an asset designed to preserve value across generations. And that's the bigger picture. Whether you agree with King or Lee, one thing is undeniable. Micro Strategy has put itself at the center of Bitcoin's story. And in doing so, it's forcing the world to confront the choice between a failing fiat system and a new monetary standard. Thanks for watching. If you found this analysis valuable, make sure to like this video, subscribe for more deep dives, and let us know in the comments. Do you think Micro Strategy is the next Exxon or the next Enron?