MicroStrategy
I want to talk about this company I invested in last year— MicroStrategy—and the investment thesis behind it because it seems many are missing the big picture here. My conviction in the company is deeply tied to my long-term outlook on Bitcoin, global capital flows, and Michael Saylor’s ambitious vision— along with his ability to execute on it.
To begin with, am increasingly bullish on Bitcoin. I believe the demand for Bitcoin will continue to increase driving its price significantly higher over the coming years. While there are couple of factors for this, in the end its a supply-demand game. And Bitcoin is an interesting asset, because it's the only asset whose supply is not a function of its demand— Meaning to get a directional view on price, you only need to predict one variable— demand— which, I believe is poised to increase due to a range of powerful tailwinds: the current geopolitical climate, the growing U.S. debt burden, increasing regulatory clarity, rising institutional and sovereign interest, and the vast adoption potential that remains—considering that only about 3% of the global population currently owns Bitcoin.
However this essay is on MicroStrategy (and not on Bitcoin) which I believe is addressing a critical gap in the market and as a result running a very powerful arbitrage. What it's doing is it is serving as a bridge between Bitcoin and traditional capital markets— executing a sophisticated strategy of issuing equity/ debt to buy Bitcoin. This is huge because there's roughly USD 900 trillion in global capital markets. This money is mainly parked in real estate (330T), bonds (300T), cash (120T), equities (115T), art (18T), gold (16T), and other collectibles (6T).
In contrast, Bitcoin is just a $2T asset today, representing a tiny fraction of the global financial system. Over the coming years, I believe a meaningful portion of this capital will flow into Bitcoin— not as a speculative bet, but as a monetary reserve asset in an increasingly digital, inflation-aware world.
However this transition won’t happen through direct Bitcoin purchases. Institutional capital requires structured, compliant, and risk-adjusted vehicles— products that fit within fiduciary mandates, regulatory frameworks, and portfolio allocation models. For example, a bond investor can’t simply buy and custody Bitcoin within their fund. What they need is a refined financial product — one that offers Bitcoin exposure while behaving like a bond in terms of structure, risk profile, and compliance.
This is what MicroStrategy is addressing. Here's how it works— MicroStrategy issues new shares at what it believes is an overvalued share price and uses the proceeds to buy undervalued Bitcoin. This accretive dilution increases Bitcoin per share, benefiting existing shareholders by capturing the spread between MicroStrategy’s share price and the market value of its Bitcoin holdings. It also issues convertible notes for investors wanting limited downside while still having the ability to participate in Bitcoin's upside. For investors wanting fixed-income, it has recently launched STRF which I believe has immense potential. These products (and more to come soon) are going after the $300T bond market. Saylor has said even if they are able to capture just 1% of this market long-term, that's $3T in capital flow!
This results in a very powerful flywheel— MicroStrategy raises capital via equity/ debt -> use proceeds to buy Bitcoin -> This increases Bitcoin per share and as Bitcoin price increases it strengthens the balance sheet -> Higher mNAV and better credit-worthiness -> Ability to raise even more capital via equity/ debt and the cycle continues. The key insight here is MicroStrategy’s value is not just passively tied to Bitcoin— it actively shapes and amplifies Bitcoin’s demand through its own capital markets activity, reinforcing the value of both the asset (Bitcoin) and itself. This is much similar to what Standard Oil did— the most dominant Oil company in history, run by the Rockefellers.
During the industrial revolution, the most important commodity was oil. However in its raw form crude oil was not much useful. What Standard Oil did is it revolutionised how the raw crude oil was refined, transported, and commercialised. It turned a volatile, underutilised raw commodity into a suite of standardised, high-demand products— Kerosene, gasoline, petroleum, jet fuel, etc. By doing so, it didn’t just ride the growth of oil—it redefined its utility and amplified the demand for the very asset it controlled.
This is similar to what MicroStrategy is doing with Bitcoin. It’s not just holding bitcoin— It’s refining and repackaging raw Bitcoin into structured financial instruments that are catered to traditional capital markets. And just like Standard Oil, every time MicroStrategy sells one of these financial products it increases demand for the underlying commodity it accumulates—Bitcoin, creating a reflexive cycle where MicroStrategy fuels Bitcoin’s adoption, and Bitcoin’s rising value fuels MicroStrategy’s ability to scale further.
Another thing I want to point out is that MicroStrategy isn’t just any participant in Bitcoin ecosystem— It’s the largest corporate holder of Bitcoin in the world. It owns about 580,250 bitcoins on its balance sheet which represents about ~2.7% of total capped supply of 21 million bitcoins. I don’t think any entity (perhaps other than a sovereign like US government) can catch up to MicroStrategy. In the world of finance, holding large reserves— whether in gold, oil or cash— has always translated into power.
These vast Bitcoin reserves gives MicroStrategy major strategic advantages— They boost its creditworthiness by serving as strong collateral, helping it raise debt more easily and cheaply. The reserves also offer significant optionality, enabling future business models as Bitcoin becomes more integrated in global finance. Most importantly, the holdings create a structural moat: with Bitcoin’s scarcity, MicroStrategy’s position is nearly impossible to replicate, solidifying its lead as a first mover with a unique, competitive asset base.
Lastly, I want to touch on what can go wrong with this model? While there are a few risks, the most significant is if something fundamentally breaks with Bitcoin—or if it fails to deliver the expected returns (at least 25–30% annually over the next decade). Another critical risk is the security of MicroStrategy’s Bitcoin holdings; despite institutional-grade custody, any breach or loss would have severe consequences given Bitcoin’s central role in the company’s strategy.
Beyond that, I’m not particularly concerned about leverage involved for two key reasons- 1. The debt is non-recourse and unsecured, meaning lenders have no claim on MicroStrategy’s assets, including its substantial Bitcoin holdings and 2. The company maintains a conservative leverage ratio—currently around 15% relative to its Bitcoin holdings—with a long-term target of 20–30%. Even if we were to look at traditional Debt/ Equity metric, it sits at around 0.15. Additionally, it remains capitalised to meet all dividend and cash flow obligations.
In summary, Microstrategy, the brainchild of Michael Saylor, isn't just issuing equity/debt to buy Bitcoin. It's building the financial rails through which global capital can flow into Bitcoin increasing both it's utility and significance. And as the largest corporate holder of Bitcoin, MicroStrategy becomes even more powerful from the very demand it helps create.