The U.S. Dollar has gotten crushed during President Donald Trump’s first 100 days in office.
From its 52-week high of $110.18 on January 13, the U.S. Dollar Index (DXY) is down 10%.
Strategy (MSTR), meanwhile, is up 16% during the same time frame.
Michael Saylor’s Bitcoin (BTC) treasury company just announced the purchase of another 15,355 BTC.
MSTR paid about $92,737 per BTC for a total purchase of approximately $1.42 billion.
Saylor also said MSTR has achieved a 13.7% BTC yield year to date.
This dude is not going to stop, lol, and why should he…
The Bitcoin Strategy Is Working
According to Saylor, “As of April 27, we hodl 553,555 $BTC acquired for ~$37.90 billion at ~$68,459 per bitcoin.”
Here’s the thing about MSTR…
The operating business itself – what Strategy had been doing for decades before incorporating the “Bitcoin Strategy” – is worth a billion dollars, maybe.
But the company is currently valued at 100x that.
When Michael Saylor announced Strategy’s first Bitcoin purchase in August 2020 – 21,454 BTC for approximately $250 million – its market cap was about $1.4 billion.
If you add up all the Bitcoin the company owns it’s worth approximately $52 billion.
With MSTR stock currently at $381 a share, that puts the company’s market cap above $102 billion.
MSTR has consistently traded at multiples of its net asset value. But that’s down to a 2X premium to the value of its Bitcoin holdings, as depicted in the chart above.
And that’s assuming the actual software business is a zero.
Is It a Ponzi Scheme?
I’m not an expert in this sort of thing.
All I know is the Securities & Exchange Commission (SEC) says it’s cool.
And more and more companies are starting to do the same thing.
Just last week, the first Brazil-based company announced it was starting to buy Bitcoin.
Itaú Bank (ITUB) in Sao Paulo bought $210 million worth of Bitcoin to diversify its balance sheet.
So MSTR is built to go up if the price of Bitcoin goes up. That’s all we’re interested in.
Is it possible that this is a ticking time bomb? Definitely.
Even some of the biggest MSTR bulls I know just assume one day it blows up.
And I hope I’m short the stock when that happens.
In the meantime, we’ll stay long while BTC is advancing. And we’ll avoid it or short it if/when the price of BTC starts to fall or enters a downtrend.
Could Strategy end up being a Ponzi scheme? Maybe.
But who cares?
We’re long. And it’s working.
Whatever happens to the company and its shareholders after we’re done with it is not our problem.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs