Transcription
Welcome back to Signal vs. Noise, where we take a look at unusual activity on the options tape and ask the question, is there something real going on here, or are people just speculating? You know, Jamal, today's episode, we're going to go with a little bit of a twist on that framing. Sometimes when someone says you should sell your kidneys before you sell your Bitcoin, and then they go and sell the Bitcoin before they sell their kidneys, it makes you wonder about the kind of conviction that's remaining in the market. And that's bringing us to MicroStrategy and Michael Saylor today, because Michael Saylor, the man who said sell your kidneys, he's still walking around with two of them, as it were. At least that's as far as I know here on this Thursday, June 4th. Um, before people start throwing tomatoes at the screen for my tacky jokes, let's consider how much they've sold here. 32. Oh, no, that's right. 32, not 32,000. They only sold 32 Bitcoin, roughly $2.5 million worth, between May 26th and May 31st. So, okay, the size doesn't matter here. This is a bit of a narrative break, if you will. Bitcoin's been getting hammered this week. What's going on here?
Look, if this is really kind of more about what's going on with Bitcoin and what it's turning into. I mean, it used to be this never-say-die product that you just held on to for life, right? And now, it's become more like a treasury asset, it would seem. And, and the real big story here, Chris, is what did they sell for, right? In this case, they sold to satisfy some obligations. Um, so, I think that's the real thing about it. It's not the size, it's what did they sell for. And this is something we're going to continue to see in the future. And so, as a result, obviously, the stock has taken a huge hit. I mean, it's taken a huge hit over the last year and change anyway, but it's even taken more of a hit more recently as a result of this news. And we've seen some options activity. Um, we've seen, I [snorts] think, uh, of all of them, the most interesting is further out, but there is some options activity that went down in the June 18th expiration. They bought the 131 puts. And again, I honestly, open interest didn't change a whole lot on many of these trades, but nevertheless, they bought some options in, in the June 18th expiration. They bought some near-term options in the June 12th expiration, bought the 128 puts. So, both of those are around strike. But then, Chris, the big trade that happened was further out in October expiration on the 50 strike. The 50 strike. I mean, you can see the stock is trading at $131 right now. They bought on the 50 strike, and that, I think, is the one that makes, that stands out the most. But nevertheless, I mean, this is just more of a story of once upon a time, there was no chance you would expect Michael Saylor and MicroStrategy to be selling Bitcoin, and now they're selling to satisfy some obligations. And that, I think, makes people just a little bit nervous.
Strategy discloses that it sells its 32 Bitcoin at a price of roughly $77,000. And Jamal, I just want to put this in perspective here. That's absolutely microscopic. MicroStrategy owns roughly 843,000 Bitcoins, so selling a handful of them, 32, 32 is about 0.0038%, 0.0038% of their whole total holdings. That's again, not anything. But there's a change in behavior. Saylor's been the flag bearer for Bitcoin accumulation over how many years now? He changes verbiage recently where he called MicroStrategy a net accumulator. Moving forward, for every one Bitcoin that they sell, they're going to try to purchase nine or 10. But that's a very different type of mindset and level of conviction than never sell or sell kidneys before you sell. And the market's starting to take notice of that right now. It's just a more bad news than what's been a pretty long crypto winter here. But I think perhaps the change that we most care about as tasty traders, volatility has finally come back into the space. There's been a rapid expansion of volatility, which is pushing around these option prices in recent sessions.
Well, you know, there was sort of this romantic idea in a way, right? It's almost like what we experienced for the last, what, seemingly 100 years with, with, with Warren Buffett. I mean, this idea that you're buying something and you're holding on to it forever. And I think as much as people have loved to made fun of Michael Saylor, they appreciated that idea that you're going to buy something and hold on forever, no matter what. And now, I, I think it almost seems more like that MicroStrategy is becoming more like a managed Bitcoin fund, if anything. And maybe this is going to be something, albeit not all the time, that we see every so often that they sell for at various different reasons because that's kind of how funds work from time to time.
You're right, MicroStrategy is effectively a leveraged Bitcoin company. They've spent about $64 billion accumulating Bitcoin that's worth roughly $53 billion mark-to-market. So, that's an $11 billion deficit right now. And when you think about the preferred dividends, the financial obligations, and the capital market dependence to keep the whole game going, you're really starting to stand on stilts here. So, the liabilities, once they're factored into this equation, the never sell mantra that Michael Saylor has held, it runs into the gravity of the cash flow obligations that they have to the outside world. So, Jamal, I'm curious what the audience thinks here. Is this signal? Is this noise? Is MicroStrategy a time of, well, a sign of the times? Is this the end of it all for Bitcoin as we dip below 65K? Let us know in the comments below. Thanks for watching Tasty Live. Like and subscribe for more videos.